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THE  COMMERCIAL  CODE 
OF  JAPAN 


11     ^ 
BY 

YANG    YIN  HANG 

GRADUATE  JN  LAW  OF  THE  WASEDA  UNIVERSITY,  TOKYO,  JAPAN 
MASTER   OF    LAW,    UNIVERSITY    OF    PENNSYLVANIA 


BOSTON,  U.  S.  A. 

THE    BOSTON   BOOK  COMPANY 

1911 


vtf 


& 


Copyright,  1911 
By  THE  UNIVERSITY  OF  PENNSYLVANIA 


The  Riverdale  Press,  Brbokline,  Boston,  Mass. 


UNIVERSITY   OF    PENNSYLVANIA 
LAW   SCHOOL   SERIES 


NUMBER    1 


TI7ACH  volume  in  this  series  has  been  made  a 
publication  of  the  School  of  Law  of  the 
University  of  Pennsylvania,  by  a  vote  of  the 
Law  Faculty.  The  authors  are  connected  with 
the  school  as  members  of  the  teaching  force, 
fellows,  or  graduate  students. 

The  object  of  the  University  is  to  promote 
the  scientific  study  of  legal  problems — histori- 
cal and  practical,  and  to  assist  in  the  improve- 
ment of  the  law. 


255534 


PREFACE. 


The  author,  Mr.  Yang  Yin  Hang,  is  a  native  of 
China  and  a  graduate  in  law  of  the  Waseda  Uni- 
versity, Tokyo,  Japan.  After  acquiring  a  thorough 
familiarity  with  English  he  spent  two  years  as  a 
graduate  student  in  law  at  the  University  of  Pennsyl- 
vania, receiving  last  June  the  degree  of  Master  of 
Law.  While  in  residence  at  the  University  he  made 
himself  familiar  with  our  commercial  law,  and  wrote 
and  annotated  this  translation.  The  object  which 
he  seeks  to  accomplish  is  not  merely  to  render  acces- 
sible to  English-speaking  students  the  commercial 
law  of  Japan,  but  also  to  increase  our  knowledge  of 
and  interest  in  the  commercial  codes  of  the  civil 
law. 

The  Commercial  Code  of  Japan  is  based  mainly 
on  the  Commercial  Code  of  Germany.  At  the  same 
time  it  contains  elements  from  the  commercial 
codes  of  practically  all  Continental  countries,  and 
some  administrative  provisions  due  to  Japanese 
conditions.  The  mere  translation  of  the  text  of  a 
code  drawn  by  civilians,  however  useful  to  one 
who  has  already  read  widely  in  the  civil  law,  is  of 
little  use  to  a  person  trained  only  in  the  American 
and  English  law,  unless  the  notes  are  so  arranged 
as  to  answer,  in  part  at  least,  the  numerous  questions 
which  necessarily  occur  to  him.     One  class  of  the 


vi  PREFACE. 

notes,  therefore,  accompanying  this  translation,  is 
designed  to  answer  the  more  important  of  these 
questions. 

Further,  carrying  out  the  thought  that  one  object 
of  the  present  work  is  to  increase  our  knowledge  of 
the  commercial  codes  of  the  civil  law  generally,  Mr. 
Yang  has  written  an  historical  introduction  designed 
to  give  in  outline,  not  only  the  history  of  the  creation 
of  the  Japanese  Commercial  Code,  but  a  concise 
statement  of  the  history  and  sources  of  the  present 
commercial  law  of  Continental  Europe.  With  the 
same  object  in  view,  he  has  also  placed  in  the  notes 
information  in  regard  to  analogous  provisions  in 
European  codes.  Finally,  as  the  Japanese  Code 
itself  is  avowedly  based  mainly  on  the  German  Com- 
mercial Code,  where  differences  exist  which  may 
interest  the  student  of  comparative  law  the  exact 
provisions  of  the  German  Code  are  given  in  full  in 
the  notes.  In  quoting  from  the  German  Code,  use 
has  been  made  of  the  translation  by  Bernard  A. 
Pratt,  Esq.,  of  the  Middle  Temple,  published  by 
Chapman  and  Hall  of  London;  all  references  to  the 
text  of  the  German  Code  in  quotation  marks  being 
verbatim  copies  of  Mr.  Pratt's  translation. 

The  reader  will  find  throughout  the  work  many 
expressions  which,  though  accurate  English,  would 
hardly  have  occurred  to  an  American  or  English- 
man. This  slight  peculiarity  of  language  may  at 
first  be  thought  to  be  a  blemish,  but  I  think  the 
reader  will  find  that  in  practically  every  instance 
Mr.  Yang's  phraseology  serves  to  convey  his  exact 
shade  of  meaning  in  the  most  concise  form  possible. 


PREFACE.  vii 

The  codes  of  the  civil  law  are  the  result  of  two  cen- 
turies of  effort  to  express  the  law  in  statutory  form. 
One  of  the  chief  values  to  us  in  their  study  is  the 
fact  that  they  teach  conciseness  combined  with 
clearness  in  the  expression  of  legal  ideas.  The 
Japanese  Commercial  Code  is  an  excellent  example. 
Mr.  Yang,  as  a  thoroughly  trained  civilian,  has  caught 
the  spirit  of  the  original,  and  his  slight  peculiarities 
of  expression  are  in  most  cases  the  happy  result  of 
an  effort  to  present  a  legal  idea  in  the  fewest  possible 
words  compatible  wTith  accuracy. 

In  the  absence  of  Mr.  Yang  and  on  his  behalf,  I 
desire  to  express,  as  I  know  he  would  wish  me  to  do, 
his  appreciation  of  the  assistance  of  Samuel  D. 
Matlack,  Esq.,  in  reading  the  proof  of  the  entire 
work  and  in  preparing  the  index.  Acknowledgment 
should  also  be  made  of  the  services  of  George  F. 
Deiser,  Esq.,  in  verifying,  by  reference  to  the  original 
sources,  all  statements  made  by  Mr.  Yang  in  the 
notes  in  regard  to  the  provisions  of  the  different 
European  and  Latin  American  codes  and  statutes. 
The  value  of  the  historical  introduction  has  been 
greatly  increased  by  the  suggestions  made  by  W.  W. 
Smithers,  Esq.,  Secretary  of  the  Bureau  of  Com- 
parative Law  of  the  American  Bar  Association. 

WM.  DRAPER  LEWIS. 


HISTORICAL  INTRODUCTION. 


Commercial  law  as  a  separate  branch  of  the 
greater  body  of  civil  law  began  to  assume  doctrinal 
distinctness  in  mediaeval  times,  though  the  origin  of 
maritime  law  may  be  traced  to  Phoenicia,  Carthage, 
Greece,  and  other  ancient  countries  along  the  eastern 
coast  of  the  Mediterranean  Sea,  whence  provisions 
for  commercial  paper,  general  average,  and  the  lia- 
bility of  the  master  of  a  ship  found  their  way  to  the 
Roman  law.  There  were  three  causes  from  which 
the  commercial  law  was  recognized  as  special  law: 
First,  owing  to  the  impetus  given  commerce  by  the 
League  of  the  Lombard  Cities,  the  League  of  the 
Rhine,  and  the  Hanseatic  League,  together  with  the 
resulting  notable  prosperity  of  many  cities  in  north- 
ern Europe  and  in  Italy  after  the  Crusades,  business 
transactions  became  more  complicated,  the  old 
Roman  law  became  inadequate  when  applied  to 
new  cases,  and  consequently  commercial  customs,  ex 
necessitate,  attained  the  force  of  law  in  all  the  great 
marts.  Second,  under  the  feudal  system,  traders 
at  fairs  and  markets  being  treated  as  a  special 
class  of  people,  usually  called  collegia  mercatorum, 
had  their  own  special  legislature,  special  jurisdiction, 
and  therefore  special  jurisprudence,  named  jus  mer- 
catorum. Thirdly,  since  the  rules  of  the  canon  law, 
especially  those  relating  to  the  prohibition  of  usury, 


x  HISTORICAL  INTRODUCTION. 

were  too  rigid  and  inflexible,  it  was  necessary 
to  have  a  law  more  equitable.  All  these  factors 
contributed  to  the  growth  of  what  in  time  came  to 
be  recognized  and  called  Commercial  Law. 

The  commercial  law  mentioned  above  was  no 
more  than  the  customary  law  prevailing  in  different 
countries,  but  not  codified.  France  was  the  first 
country  to  have  a  commercial  code.  Early  in  1673 
the  famous  ordonnance  of  Louis  XIV,  entitled  he 
Code  des  Marchands,  was  issued.  It  consisted  of 
one  hundred  and  twenty-two  articles,  divided  into 
Commerce  in  General,  Bills  and  Notes,  Bankruptcy, 
and  Commercial  Jurisdictions.  This  ordinance  was 
also  called  Code  Savary,  because  it  was  written  by 
Jacques  Savary,  an  expert  merchant.  In  1681 
another  code,  called  the  Ordonnance  de  la  Marine, 
was  promulgated.  It  was  considered  the  most 
excellent  code  at  the  time  of  Louis  XIV,  and 
was  welcomed  by  all  the  countries  of  Europe.  By 
the  beginning  of  the  nineteenth  century,  the  Code 
des  Marchands  and  the  Ordonnance  de  la  Marine  had 
become  overshadowed  by  doctrinal  development,  and 
changed  methods  of  business  called  for  a  restate- 
ment of  the  principles  of  commercial  law. 

In  1808  the  present  French  Commercial  Code 
went  into  effect.  It  consists  of  four  books, — Com- 
merce in  General,  Marine  Commerce,  Bankruptcy, 
and  Commercial  Jurisdictions.  Since  the  French 
Commercial  Code  was  the  only  commercial  code  at 
the  beginning  of  the  nineteenth  century,  the  accom- 
plishment of  that  code  was  a  great  revolution 
in  the  legal  world.     Every  country  in  Continental 


HISTORICAL  INTRODUCTION.  Xl 

Europe  was  more  or  less,  directly  or  indirectly, 
affected  by  this  code.  So  far  as  the  military  force 
of  Napoleon  extended,  the  French  Commercial  Code 
had  its  influence. 

Germany,  however,  had  an  independent  system 
of  commercial  law.  Before  the  confederation  of  the 
German  states,  Prussia  had  already  had  a  code 
called  Das  allgemeine  Landreckt.  It  was  a  volumi- 
nous code,  containing  civil  law,  general  law,  and 
even  public  law,  but  many  of  the  provisions  dealt 
with  causa  mercantilis,  especially  the  Law  of  Bills 
and  Notes  and  Marine  Commerce.  This  code  was 
promulgated  and  enforced  in  1794,  and  some  Germans 
insist  that  it  was  the  oldest  commercial  code  in 
the  world.  It  was  the  local  law  of  Prussia  and  not 
the  federal  law  of  Germany.  Indeed,  there  was 
then  no  ' 'Germany."  The  ' 'Germanic  Confedera- 
tion" of  1814  was  not  pan-Germanic,  and  achieved 
little  more  than  a  name  until  it  evaporated  in  1867, 
when  the  "Confederation  of  the  North"  eliminated 
Austrian  influence  and  laid  the  ground  for  the  real 
German  Empire  in  1871.  In  1847  the  Law  of  Bills 
and  Notes  was  passed  by  the  representatives  of  the 
states,  but  was  not  adopted  by  any  considerable 
number  of  the  states  until  1862.  In  1861  the  old 
German  Commercial  Code  was  passed,  but  was  not 
adopted  by  the  states  composing  the  Confederation 
of  the  North  until  1869.  The  old  German  Commer- 
cial Code  consisted  of  four  books:  (1)  Traders,  (2) 
Commercial  Associations,  (3)  Commercial  Trans- 
actions, and  (4)  Marine  Commerce.  The  present 
German  Commercial  Code  of  1897  is  based  on  this 


xii  HISTORICAL  INTRODUCTION. 

code,  but  has  made  a  considerable  change;  the  new 
code  does  not  recognize  absolute  commercial  trans- 
actions as  does  the  French  Commercial  Code,  but 
recognizes  a  trader  as  the  centre  of  causa  mercantilis. 
In  1877  the  Law  of  Bankruptcy  was  passed  as  a 
special  statute.  It  is  applicable  to  all  traders  and 
non-traders;  whereas  in  France,  such  law  of  bank- 
ruptcy is  only  applicable  to  traders. 

After  the  passage  of  the  old  German  Commercial 
Code,  European  countries  began  to  adopt  the  Ger- 
man system  instead  of  the  French  system.  Some 
still  adhered  to  the  old  French  theory,  and  some 
tried  to  combine  the  two  theories.  Thus,  in  the 
present  world  (except  in  England  and  the  United 
vStates,  where  the  development  of  law  is  independent 
of  Continental  Europe,  and  where  there  is  no  judicial 
or  legislative  difference  between  the  civil  law  and 
commercial  law),  there  are  three  systems  of  com- 
mercial law, — French  system,  German  system  and 
Franco-German  system. 

FRENCH  SYSTEM. 

This  system  includes  the  old  commercial  codes 
of  Italy,  Belgium,  Spain,  and  Portugal,  and  the 
present  commercial  codes  of  Holland,  Luxemburg, 
and  those  countries  in  Central  and  South  America 
which  have  adopted  the  old  Spanish  Commercial 
Code. 

Italy  has  contributed  many  commercial  custom- 
ary laws  to  the  world.  Before  the  adoption  of  the 
old  Codice  di  Commcrcio,  there  were  different  laws 
in  different  states.     The  old  code  was  promulgated 


HISTORICAL  INTRODUCTION.  xiu 

in  1866  and  was  chiefly  derived  from  the  French 
Commercial  Code. 

Belgium  became  subject  to  the  French  Commer- 
cial Code  of  1808  at  the  same  time  as  France,  of  which 
it  was  territorially  then  a  part,  and  after  the  fall  of 
Napoleon  in  181 4 retained  it;  but  after  the  separation 
from  Holland  in  1830  several  statutes  were  passed  by 
which  the  French  Code  was  more  or  less  revised,  the 
several  acts  while  of  different  dates  being  designated 
as  books  of  the  revised  Commercial  Code. 

Spain,  as  early  as  1737,  in  the  reign  of  King  Philip 
V,  had  a  commercial  code  which  was  based  on  the 
Code  des  Marchands  and  the  Ordonnance  de  la  Marine 
of  France,  as  well  as  the  customary  law  of  Spain.  In 
1829  the  old  Codigo  de  Commercio  was  passed  and 
became  effective  January  1,  1830.  It  consisted  of 
five  books:  (1)  Traders  and  Agents;  (2)  Commercial 
Transactions;  (3)  Marine  Commerce ;  (4)  Bankruptcy; 
(5)  Commercial  Jurisdictions.  But  in  1868  Com- 
mercial Jurisdictions  were  abolished.  Though  this 
code  was  chiefly  derived  from  the  French  Commer- 
cial Code,  it  took  many  provisions  from  the  King 
Philip's  Code  of  1737.  The  Spanish  Code  of  1829 
is  the  basis  of  the  mercantile  law  now  prevalent  in 
many  countries  of  Central  and  South  America,  such 
as  Brazil,  Chili,  Peru,  Honduras,  Nicaragua,  etc. 

Portugal  first  had  a  commercial  code  in  1833, 
called  Codigo  Commercia  Portugues.  It  was  divided 
into  two  books, — the  Land  Commerce  and  the 
Marine  Commerce.  It  was  based  on  the  commercial 
codes  of  France,  Spain  and  Holland,  and  also  the 
Prussian  Code  of  1794. 


Xiv  HISTORICAL  INTRODUCTION. 

Holland  became  subject  to  the  French  Commercial 
Code  in  1811  after  the  country  had  been  annexed  to 
the  French  Empire,  but  after  the  restoration  of  1813 
modifications  ensued,  and  in  1817  commercial  juris- 
dictions were  abolished.  In  1838  the  Weiboek  van 
Koophandel  was  promulgated  and  enforced.  It  is 
divided  into  three  books,  which  are  identical  with 
the  first  three  books  of  the  French  Commercial  Code. 
But  in  the  Dutch  Code  there  are  provisions  for  insur- 
ance other  than  marine  insurance  and  for  commer- 
cial vessels  sailing  on  rivers,  lakes  and  harbor 
waters.  In  1893  the  law  of  bankruptcy  was 
revised.  It  is  applicable  to  all  traders  and  non- 
traders,  as  in  Germany. 

Luxemburg  still  uses  the  French  Commercial  Code 
as  its  own  code  without  alteration. 

GERMAN  SYSTEM. 

This  system  includes  the  commercial  codes  of 
Austria,  Hungary,  Switzerland,  and  the  commercial 
law  of  Scandinavia,  etc. 

In  1850  Austria  adopted  the  Law  of  Bills  and 
Notes,  which  was  passed  by  the  representatives  of 
the  federal  states  of  Germany.  The  old  German 
Commercial  Code  was  also  adopted  to  take  effect  in 
1863,  excepting  the  book  on  Marine  Commerce;  for 
Austria  already  had  its  own  customary  law  concern- 
ing marine  commerce.  This  law  chiefly  deals  with 
marine  police  and  it  has  never  been  codified.  The 
Law  of  Bankruptcy  was  passed  in  1868  as  a  statute. 
It  is  based  on  the  law  of  bankruptcy  of  Prussia  and 
is  applicable  to  all  traders  and  non-traders. 


HISTORICAL  INTRODUCTION.  xv 

Hungary,  having  had  a  complete  body  of  com- 
mercial law  of  its  own  until  1850,  and  after  that  year 
having  submitted  to  various  legislation  dictated  by 
Austria,  which  was  found  unsuitable,  had  a  commis- 
sion prepare  a  code  in  harmony  with  the  usages  of 
the  people,  and  the  law  thus  prepared  was  promul- 
gated in  1861  and  from  time  to  time  afterwards  was 
revised.  A  new  code  was  published  in  1875.  The 
first  book  deals  with  traders  and  business  associa- 
tions, the  second  book  deals  with  commercial  trans- 
actions; but,  as  in  Austria,  there  are  no  provisions 
for  marine  commerce.  However,  there  are  provi- 
sions for  warehousing,  associations  and  contracts  of 
insurance  other  than  marine  insurance.  The  Law 
of  Bills  and  Notes  was  enforced  in  1877,  and  the 
Law  of  Bankruptcy  in  1881,  both  being  of  German 
origin. 

Switzerland,  like  England  and  the  United  States, 
does  not  recognize  the  difference  between  civil  and 
commercial  law;  but  it  has  a  code  called  Code 
federal  des  obligations,  passed  in  1881.  This  code 
provides  for  ordinary  contracts,  obligations,  transfer 
of  property  rights,  and  the  general  principles  appli- 
cable  to   both   civil   and   commercial   transactions. 

The  present  code  commission,  however,  has  already 
drafted  a  new  book  on  the  subject,  to  be  added  to 
the  four  books  adopted  in  1909,  to  take  effect  as 
parts  of  the  new  code  on  January  1,  1912. 

The  commercial  law  of  Scandinavia  is  not  codified. 
Denmark  is  governed  by  the  modified  general  code 
of  Christian  V,  published  in  1683  (Danske  Lov) ; 
Norway  by   a   general   code   promulgated   in    1867 


xvi  HISTORICAL  INTRODUCTION. 

( Norske  Lov) ,  which  is  largely  a  copy  of  the  Danish 
Code,  and  Sweden  by  the  general  code  of  1734,  com- 
posed of  a  collection  of  Swedish  acts  and  the  Danish 
Code  as  then  amended.  In  all  those  countries, 
however,  the  deficiencies  of  their  general  codes 
have  been  supplied  by  later  special  laws  upon  asso- 
ciations, bills  of  exchange,  bankruptcy  and  other 
features  of  commercial  law. 

FRANCO-GERMAN  SYSTEM. 

This  system  includes  the  present  commercial  codes 
of  Italy,  Spain  and  Portugal,  as  well  as  the  new 
commercial  codes  of  Roumania  and  Argentine.  The 
commercial  law  of  Russia  partakes  largely  of  this 
system. 

The  present  Commercial  Code  of  Italy  was  pro- 
mulgated in  1882  and  enforced  in  1883.  Though 
this  code  contains  the  law  of  bankruptcy  and  of 
commercial  jurisdictions  according  to  the  French 
style,  its  substance  is  mainly  derived  from  the  old 
German  Commercial  Code.  Indeed,  it  abstracts  the 
excellence  of  both  the  French  and  the  German  codes. 
Besides  this,  there  is  a  separate  code  called  Codice 
par  la  marina  mercantile,  which  consists  of  public 
law    concerning    maritime    affairs. 

The  present  Commercial  Code  of  Spain  was  pro- 
mulgated in  1885  and  extended  to  the  island  posses- 
sions in  1886.  It  is  divided  into  four  books:  (1) 
Traders  and  Commerce  in  General;  (2)  Commercial 
Contracts;  (3)  Marine  Commerce;  (4)  Bankruptcy 
and  Commercial  Prescriptions. 

The  present  Commercial  Code  of  Portugal  was 
promulgated  in  1888  and  enforced  in  1889.     It  is 


HISTORICAL  INTRODUCTION.  xvu 

divided  into  four  books  as  the  present  Spanish 
Commercial  Code,  and  is  chiefly  derived  from  the 
present  Italian  Commercial  Code  and  the  Belgian 
Commercial  Code. 

The  new  Commercial  Code  of  Roumania  of  1887 
is  modelled  on  the  present  Commercial  Code  of  Italy. 

The  new  Commercial  Code  of  Argentine  of  1889 
is  modelled  on  the  present  Commercial  Code  of 
Portugal. 

Russia  has  a  code  called  Svod  Zakonov,  enforced 
in  1835,  although  provision  for  a  separate  commer- 
cial jurisdiction  was  authorized  in  1 833.  Its  eleventh 
book  deals  with  commercial  law.  This  book  consists 
of  five  volumes:  (1)  Commercial  Rights;  (2)  Com- 
mercial Obligations,  including  Bills  and  Notes;  (3) 
Commercial  Vessels;  (4)  Commercial  Jurisdictions, 
including  the  Bankruptcy  of  Traders ;  (5)  Commercial 
Institutions,  including  Exchange,  Brokerage,  and 
Commercial  Books .  These  provisions  were  developed 
from  the  time  of  Peter  the  Great.  In  1857  a  revi- 
sion of  the  Code  of  1835  was  published  and  a  part 
designated  as  Ustav  Torgovi,  the  Russian  words  for 
"commercial  law."  This  law  is  not  applicable  to 
Poland  and  Finland,  the  former  using  the  French 
Commercial  Code,  the  latter  having  its  own  custom- 
ary law,  its  civil  code  of  1734  and  subsequent 
special  statutes. 

The  three  systems  of  commercial  law  mentioned 
above  are  all  directly  affected  by  the  Roman  system 
of  law,  though  the  Roman  law  only  recognized  the 
difference  between  jus  civile  and  jus  gentium,  and 


xviii  HISTORICAL  INTRODUCTION. 

in  those  days  commercial  law  had  not  much  de- 
veloped. The  influence  of  the  Roman  system  of 
law  is  now  not  only  felt  in  the  Western  world,  but 
has  extended  to  the  Eastern  world. 

Japan  is  the  first  Oriental  nation  to  adopt  the 
Occidental  law.  In  Japan,  as  in  other  Oriental  coun- 
tries, private  law  was  in  a  very  undeveloped  state, 
and  the  people  transacted  their  business  with  each 
other  according  to  customs  and  usages,  which  were 
not  identical  in  all  parts  of  the  country  and  were 
not  necessarily  enforced  by  the  courts.  In  1880  the 
Japanese  government  employed  a  German,  named 
Reusler,  to  compile  a  Japanese  commercial  code. 
This  was  completed  and  promulgated  in  1890,  and 
is  known  as  the  First  Japanese  Commercial  Code. 
The  law  of  commercial  associations,  of  bills  and 
notes,  and  of  bankruptcy,  which  constituted  a  part 
of  the  code,  was  enforced  in  1893,  and  the  rest  of  the 
code  was  enforced  in  1898.  When  this  code  was 
compiled  different  foreign  commercial  codes  were 
consulted,  especially  the  German  Commercial  Code 
of  1861,  the  French  Commercial  Code  of  1808,  the 
Italian  Commercial  Code  of  1865,  and  the  Spanish 
Commercial  Code  of  1830.  As  the  compiler  of  this 
code  was  a  German,  he  naturally  took  many  of  its 
provisions  from  the  old  German  Commercial  Code, 
yet  the  fact  that  the  code  included  the  law  of  bank- 
ruptcy and  the  law  of  bills  and  notes  showed  the 
influence  of  the  French  system.  Indeed,  the  First 
Japanese  Commercial  Code  belonged  to  the  Franco- 
German  system. 

But  there  were  many  defects  in  this  code:  First, 
the  old  Japanese  customs  and  usages  not  being  very 


HISTORICAL  INTRODUCTION.  xix 

much  consulted,  in  some  points  it  was  not  adaptable 
to  the  Japanese  business  conditions.  Second,  as  it 
contained  public  regulations  concerning  insurance 
business  and  commercial  vessels,  it  confounded  the 
public  and  private  law;  and  again,  as  it  included 
procedural  provisions,  it  also  confounded  the  adjec- 
tive and  substantive  law.  Third,  since  the  First 
Japanese  Civil  Code  was  compiled  by  a  Frenchman, 
and  was  modelled  on  the  French  Civil  Code,  many- 
provisions  of  the  Commercial  Code  were  contra- 
dictory to  those  of  the  Civil  Code,  and  besides  there 
were  many  redundant  provisions  in  the  two  codes. 
For  these  reasons,  the  First  Commercial  Code  was 
afterwards  revised,  and  in  1899  the  present  Com- 
mercial Code  was  promulgated  and  in  the  same  year 
enforced.  The  present  code  is  based  entirely  on  the 
German  system,  especially  the  German  Commercial 
Code  of  1897,  though  a  few  points,  such  as  the  inser- 
tion of  the  Law  of  Bills  and  Notes  in  the  code,  the 
recognition  of  the  difference  between  absolute  and 
relative  commercial  transactions,  the  adoption  of 
two  warehouse  receipts,  etc.,  are  different  from  the 
German  Code;  and  as  to  business  associations  the 
French  theories  have  been  retained.  With  the 
enforcement  of  the  present  code,  the  First  Commer- 
cial Code  was  abolished,  except  the  law  of  bank- 
ruptcy, which  is  still  in  force.  The  law  of  bankruptcy 
in  Japan,  as  in  France  and  Italy,  is  applicable  only 
to  traders. 

YANG  YIN  HANG. 

University  of  Pennsylvania, 
June  14,  1910. 


TABLE  OF  CONTENTS. 


Book  I. — Of  Commerce  in  General. 

Page 

Section  1. — The  Application  of  Law 1 

Section  2. — Traders 3 

Section  3.— The  Trade  Register    5 

Section  4. — Trade  Names 9 

Section  5. — Trade  Books    15 

Section  6. — Trade  Employees    17 

Section  7. — Commercial  Agents 21 

Book  II.— Business  Associations. 

Section  1. — General  Provisions 25 

Section  2. — Soci^te  en  Nom  Collectif 27 

Sub-Section  1. — Formation    27 

Sub-Section  2. — The  Internal  Relations  of  the  Asso- 
ciation    30 

Sub-Section  3. — The  External  Relations  of  the  Asso- 
ciation   .  .  33 

Sub-Section  4. — The  Retirement  of  Members 36 

Sub-Section  5. — Dissolution 40 

Sub-Section  6. — Liquidation    43 

Section  3. — Societe  en  Commandite 50 

Section  4. — Societe  Anonyme 54 

Sub-Section  1. — Formation    54 

Sub-Section  2. — Shares 64 

Sub-Section  3. — The  Organization  of  the  Association  71 

A.  The  General  Meeting  of  Shareholders 71 

B.  Directors 75 

C.  Auditors    82 

Sub-Section  4. — Accounts  of  the  Association 86 

Sub-Section  5. — Bonds    91 


xxil  CONTENTS. 

Section  4 — continued.  page 
Sub-Section  6. — The  Alteration  of  Articles  of  Asso- 
ciation    93 

Sub-Section  7. — Dissolution 98 

Sub-Section  8. — Liquidation    100 

Section  5. — Socie^  en  Commandite  par  Actions 103 

Section  6. — Foreign  Business  Associations    Ill 

Section  7. — Penal  Provisions    114 

Book  III.— Commercial  Transactions. 

Section  1. — General  Provisions 119 

Section  2. — Sale  135 

Section  3. — Current  Accounts 138 

Section  4.— Society  Tacite   140 

Section  5. — Brokerage 142 

Section  6. — Commission  Merchants    145 

Section  7. — Forwarding  Agents 148 

Section  8. — Common  Carriers    151 

Sub-Section  1. — Carriage  of  Goods  152 

Sub-Section  2. — Carriage  of  Passengers  161 

Section  9.— Deposit 162 

Sub-Section  1. — General  Provisions 162 

Sub-Section  2. — Warehousing 163 

Section  10. — Insurance   172 

Sub-Section  1. — Insurance  against  Loss 172 

A.  General  Provisions    172 

B.  Fire  Insurance 185 

C.  Carriage  Insurance 185 

Sub-Section  2. — Life  Insurance 186 

Book  IV.— Negotiable  Paper. 

Section  1. — General  Provisions 193 

Section  2.— Bills  of  Exchange 198 

Sub-Section  1. — The  Drawing  of  a  Bill  of  Exchange  198 

Sub-Section  2. — Indorsement    200 

Sub-Section  3. — Acceptance 202 


CONTENTS.  xxin 

Section  2 — continued.  Page 

Sub-Section  4. — Collateral  Security    205 

Sub-Section  5. — Payment 208 

Sub-Section  6.— The  Right  of  Recourse 209 

Sub-Section  7. — Surety 213 

Sub-Section  8. — Intervention    214 

A.  Acceptance  for  Honor 214 

B.  Payment  for  Honor 217 

Sub-Section  9.— Protest 219 

Sub-Section  10. — Bills  in  a  Set  and  their  Copies    .  .  .  220 

Section  3. — Promissory  Notes   223 

Section  4.— Checks    224 

Book  V. — Marine  Commerce. 

Section  1. — Ships  and  Shipowners    227 

Section  2.— The  Crew    236 

Sub-Section  1. — The  Captain  of  a  Ship 236 

Sub-Section  2. — Mariners   245 

Section  3. — Carriage    249 

Sub-Section  1. — Carriage  of  Goods 249 

A.  General  Provisions 249 

B.  Bills  of  Lading 262 

Sub-Section  2. — Carriage  of  Passengers   264 

Section  4. — General  Average   267 

Section  5. — Marine  Insurance    274 

Section  6.— The  Ship's  Creditors 288 


THE  COMMERCIAL  CODE 
OF  JAPAN. 


BOOK  I. 

OF  COMMERCE  IN  GENERAL. 


SECTION  1.— THE  APPLICATION  OF  LAW. 

Article  1.  In  the  absence  of  any  provision  in 
this  Code  concerning  causa  mercantilis,  the  com- 
mercial customary  law  is  applicable;  and  if  there  is 
no  such  customary  law  the  Civil  Code  is  applicable. 

Derived  from  Art.  1  of  the  old  German  Commercial  Code. 
The  same  provisions  are  also  found  in  Art.  1  of  the  Hungarian 
Commercial  Code,  Art.  1  of  the  Italian  Commercial  Code, 
Art.  2  of  the  Spanish  Commercial  Code,  and  Art.  3  of  the 
Portuguese  Commercial  Code. 

There  are  no  such  provisions  in  the  present  German  Com- 
mercial Code;  but  according  to  the  Rules  for  the  Operation 
of  the  Commercial  Code  of  Germany,  only  the  provisions  of 
the  Civil  Code  are  applicable  in  the  absence  of  any  provision 
in  the  Commercial  Code  and  in  the  said  Rules. 

Article  2.  The  provisions  of  this  Code  are  appli- 
cable to  commercial  transactions  carried  on  by 
public  juristic  persons,  unless  the  law  or  ordinances 
provide  to  the  contrary. 


2  COMMERCIAL  CODE  OF  JAPAN. 

A  juristic  person  is  a  person  or  organization  capable  of 
being  the  subject  of  rights.  A  public  juristic  person  is  a 
juristic  person  constituting  a  part  of  the  political  institution 
of  the  state;  for  example,  cities,  towns,  or  public  institutions 
such  as  the  Board  of  Trade,  the  Institution  for  the  Preven- 
tion of  Flood,  etc. 

According  to  Art.  7  of  the  Italian  Commercial  Code  and 
Art.  17  of  the  Portuguese  Commercial  Code,  the  State, 
Provinces  and  Communes  are  prohibited  from  acting  as 
traders.  However,  the  German  Commercial  Code  recognizes 
that  a  public  juristic  person  may  be  a  trader  within  the 
meaning  of  the  Code,  but  at  the  same  time  it  provides  that 
certain  provisions  applicable  to  an  ordinary  trader  are  not 
applicable  to  a  public  juristic  person.  Arts.  36  and  42  of 
that  Code  read   as   follows: — 

"Art.  36.  Any  business  undertaken  by  the  Imperial 
Government,  by  a  Federal  State,  or  by  a  parochial  body, 
need  not  be  registered.  If  any  registration  nas  been  made, 
it  must  be  confined  to  a  statement  of  the  firm-name,  the 
place  of  business,  and  the  object  of  the  undertaking." 

"Art.  42.  The  rights  of  the  directorate  of  an  undertaking 
of  the  Imperial  Government,  of  a  Federal  State,  or  parochial 
body,  to  keep  accounts  in  a  way  different  to  those  enacted 
by  Arts.  39  to  41,  are  in  no  way  affected." 

Article  3.  The  provisions  of  this  Code  are  appli- 
cable to  both  parties,  if  the  transaction,  on  the 
part  of  one  of   them,  is  a  commercial  transaction. 

Thus:  if  a  student  buys  a  book  from  a  bookseller,  the 
transaction  on  the  part  of  the  bookseller  being  a  commercial 
transaction,  the  whole  transaction  is  subject  to  the  Com- 
mercial  Code. 

Both  the  old  and  the  present  German  Commercial  Code 
(Art.  345)  have  the  same  provisions.  The  French  Commer- 
cial Code  and  those  codes  based  on  the  French  system  have 
no  such  provisions. 


OF  COMMERCE  IN  GENERAL.  3 

SECTION  2.— TRADERS. 

Article  4.  Any  person  carrying  on  a  commercial 
transaction1  in  his  own  name2  as  a  business3  is  a 
trader  within  the  meaning  of  this  Code.4 

1A  commercial  transaction  is  either  absolute  or  relative. 
An  absolute  commercial  transaction  is  a  transaction  which  by 
its  nature  is  commercial,  irrespective  of  the  person  who  carries 
it  on.  For  instance,  a  man  buys  goods  with  the  intention  of 
selling  them  again  for  profit:  this  is  an  absolute  commercial 
transaction.  On  the  other  hand,  a  transaction  is  a  relative 
commercial  transaction,  not  because  of  its  nature,  but  because 
the  person  carrying  it  on  is  a  trader.  For  instance,  carriage 
of  goods  or  passengers  is  a  relative  commercial  transaction. 
If  even  a  student  buys  books  with  the  intention  of  selling 
them,  the  transaction  is  commercial,  for  such  a  transaction 
is  an  absolute  commercial  transaction;  on  the  other  hand, 
if  a  student,  not  a  common  carrier,  carries  goods  even  for 
the  purpose  of  receiving  a  pecuniary  reward,  the  transaction 
is  not  commercial,  for  the  business  of  carriage  is  only  a  relative 
commercial  transaction  and  the  student  in  the  illustration 
given  is  not  in  the  business.    See  Arts.  263  and  264,  infra. 

2  "In  his  own  name"  means  that  the  trader  is  to  enjoy  the 
rights  and  perform  the  obligations  arising  from  his  business. 
Thus:  if  he  appoints  a  manager  to  manage  his  business,  he 
is  no  less  a  trader;  but  the  manager  is  not  a  trader  but  an 
employee.  In  case  a  guardian  carries  on  business  for  his  ward, 
only  the  ward  is  the  trader  within  the  meaning  of  the  Code. 

3  The  expression  "as  a  business"  means  that  the  commercial 
transaction  is  one  of  a  series  of  transactions  successively  car- 
ried on  for  the  purpose  of  earning  profit.  Thus,  a  mutual 
insurance  association  is  not  a  trader.  Again,  if  a  person, 
occasionally  or  even  very  often,  goes  to  the  market,  buy- 
ing goods  which  he  again  sells  for  a  profit,  he  is  not  a  trader, 
for  he  is  not  carrying  on  such  transactions  regularly. 


4  COMMERCIAL  CODE  OF  JAPAN. 

4  Derived  from  Art.  1  of  the  French  Commercial  Code  and 
Art.  4  of  the  old  German  Commercial  Code.  On  the  other 
hand,  Art.  1  of  the  present  German  Commercial  Code  pro- 
vides that  a  trader  within  the  meaning  of  the  Code  is  a 
person  who  carries  on  a  trade,  and  then  enumerates  nine 
kinds  of  trade,  such  as  the  buying  and  reselling  of  movable 
goods  or  valuables,  etc.  Thus,  according  to  the  German 
principle,  the  center  of  causa  mercantilis  is  the  trader  himself, 
and  not  the  commercial  transaction;  and  consequently, 
the  German  Code  does  not  recognize  the  existence  of  the 
absolute  commercial  transaction. 

Article  5.  An  infant  or  married  woman  carrying 
on  a  commercial  transaction  shall  be  registered. 

They  must  register  their  names  and  residences  in  the  court. 
Special  registers,  such  as  the  Register  for  Infants  and  the 
Register  for  Married  Women,  are  kept  in  the  court.  See  Arts. 
140  and  149  of  the  Procedure  in  Non-actionable  Matters. 

Article  6.  If  an  infant  or  married  woman  is 
permitted  to  become  a  member  of  unlimited  liability 
in  a  business  association,  he  or  she  is  considered  as 
a  competent  person  in  relation  to  the  business 
of  the  company. 

The  permission  spoken  of  is  granted  to  the  infant  by  his 
parents  or  guardians:  See  Arts.  883  and  921  of  the  Civil 
Code:  to  the  married  woman,  by  her  husband:  See  Art.  14 
of  the  Civil  Code. 

Article  7.  A  guardian  carrying  on  a  commercial 
transaction  for  his  ward  shall  be  registered.1  Any 
restriction  on  the  authority  of  the  guardian  cannot 
be  set  up  as  a  defense  against  third  parties  acting 
in  good  faith.2 


OF  COMMERCE  IN  GENERAL.  5 

1A  special  register  called  the  Register  for  Guardians  is 
kept  in  the  court.  See  Art.  140  of  the  Procedure  in  Non- 
actionable  Matters. 

2  When  a  guardian  carries  on  a  commercial  transaction  for 
his  ward,  it  is  necessary  for  the  guardian  to  get  permis- 
sion from  the  concilium  domesticum,  which  is  an  organiza- 
tion recognized  by  the  Civil  Code,  the  members  of  which 
are  chosen  from  the  relatives  of  the  family  either  by  the 
court  or  by  will.  This  organization  has  power  to  restrict  the 
authority  of  the  guardian. 

"Acting  in  good  faith,"  means  without  notice. 

Article  8.  The  provisions  for  the  trade  register, 
trade  names,  and  trade  books  have  no  application 
to  peddlers,  street  venders  and  other  petty  traders. 

If  the  capital  of  a  trader  is  not  above  500  yen  (a  yen 
equals  about  one  half  of  an  American  dollar)  he  shall  be 
treated  as  a  petty  trader.  See  Art.  7  of  the  Rules  for  the 
Operation  of  the  Commercial  Code  and  the  Imperial  Decree 
of  the  32d  year  of  Meiji,  No.  271. 

Art.  4  of  the  German  Commercial  Code  provides  that  the 
enactments  concerning  trade  names,  trade  books  and  pro- 
curation have  no  application  to  artisans  or  to  persons  whose 
business  does  not  exceed  the  limits  of  a  mere  handicraft. 
In  Japan,  the  scope  of  the  petty  trader  is  determined 
by  the  Imperial  Decree;  in  Germany,  each  state  is  em- 
powered to  issue  decrees  determining  in  the  most  precise 
manner  what  a  mere  handicraft  is,  taking  as  a  basis  the 
manner  in  which  it  is  taxed,  or  in  the  absence  of  any  assess- 
ment, some  other  basis. 

SECTION  3.— THE  TRADE  REGISTER. 

Article  9.  Whatever  is  to  be  registered  under 
the  provisions  of  this  Code1  must  be  registered  on 


6  COMMERCIAL  CODE  OF  JAPAN. 

the  application  of  the  party  in  the  trade  register 
of  the  court  within  whose  jurisdiction  the  seat  of 
business  of  such  party  is  situated.2 

1  There  are  ten  kinds  of  registers,  which  are  kept  in  the 
Court:  (1)  the  Register  for  Trade  Names,  Arts.  19,  21,  24; 
(2)  the  Register  for  Infants,  Art.  5;  (3)  the  Register  for 
Married  Women,  Art.  5;  (4)  the  Register  for  Guardians, 
Art.  7;  (5)  the  Register  for  Managers,  Art.  31;  (6)  the  Reg- 
ister for  Societe  en  nom  collectif,  Arts.  51-53,  etc.;  (7)  the 
Register  for  Societe  en  commandite,  Arts.  105,  107;  (8) 
the  Register  for  Societe  anonyme,  Arts.  141,  204,  217,  etc.; 
(9)  the  Register  for  Societe  en  commandite  par  actions,  Arts. 
242,254;   (10)  the  Register  for  Foreign  Companies,  Art.  255. 

2  The  competent  court  in  which  such  registration  must  be 
made  is  the  Sub-district  Court,  or  its  branch  office,  at  the  place 
where  the  applicant's  seat  of  business  is  located.  See  Arts. 
39,  149,  etc.,  of  the  Procedure  in  Non-actionable  Matters, 
and  the  Regulations  of  the  Trade  Register. 

Art.  8  of  the  German  Commercial  Code  provides  that  the 
trade  register  is  to  be  kept  by  the  court.  Art.  12  provides 
that  declarations  relating  to  entries  in  the  trade  register,  as 
well  as  the  affixing  of  the  prescribed  signatures,  the  custody 
of  which  is  imposed  on  the  court,  ought  to  be  made  there 
either  in  person  or  in  a  public  and  formal  manner. 

Article  10.  Whatever  is  to  be  registered  at  the 
place  of  the  principal  office  must  be  also  registered 
at  the  place  of  any  branch  establishment  unless 
the  Code  provides  to  the  contrary. 

Art.  13,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 

"So  far  as  is  not  otherwise  laid  down  in  this  Code,  entries 
in  the  trade-register  and  the  declarations  required  for  this 
purpose,  as  well  as  the  affixing  of  signatures  and  the  other 


OF  COMMERCE  IN  GENERAL.  7 

depositions  required  to  be  made  at  the  trade  register,  must 
be  made  at  each  court  which  keeps  such  a  trade  register, 
and  within  whose  jurisdiction  the  proprietor  of  any  firm 
has  a  branch  establishment,  and  in  the  same  manner  as  made 
at  the  court  of  the  principal  place  of  business. 

"No  entry  can  be  made  in  the  court  of  the  branch  estab- 
lishment before  it  is  shown  that  a  proper  entry  has  been 
made  in  that  of  the  principal  one." 

Article  11.  Whatever  has  been  registered  shall 
be  published  by  the  court  without  delay. 

It  is  published  in  the  official  paper  and  also  in  a  newspaper. 
The  Sub-district  Court,  during  the  month  of  December  every 
year,  designates  the  newspaper  in  which  all  things  registered 
will  appear.      See  Arts.   144-146  of  the  Procedure  in  Non- 
actionable  Matters. 

The  provisions  of  Arts.  10  and  11  of  the  German  Commer- 
cial Code  are  substantially  the  same  as  those  of  the  Procedure 
in  Non-actionable  Matters. 

Article  12.  Whatever  is  to  be  registered  cannot 
be  set  up  as  a  defense  against  third  parties  acting 
in  good  faith  before  it  is  registered  and  published. 
Even  after  such  registration  and  publication  it 
cannot  be  set  up  against  those  who  for  a  reasonable 
cause  have  no  knowledge  of  the  fact. 

If  a  third  party  using  ordinary  care  can  discover  the  fact, 
he  will  not  be  protected  if  his  ignorance  is  due  to  his  own 
negligence.  On  the  other  hand,  if  he  is  ignorant  without  his 
own  fault,  he  can  defend  himself  on  the  ground  of  a  reasonable 
cause.  But  in  such  case  the  burden  of  proof  is  upon  the 
defendant. 

Art.  15,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 


8  COMMERCIAL  CODE  OF  JAPAN. 

"So  long  as  a  fact  which  ought  to  be  inscribed  in  the  trade 
register  has  not  been  so  inscribed  and  published,  it  cannot 
be  used  to  the  prejudice  of  a  third  party  by  him  whose  duty 
it  is  to  inscribe  it,  unless  such  third  party  has  had  knowledge 
of  such  fact. 

"If  a  fact  has  been  duly  registered  and  published,  a  third 
person  is  obliged  to  admit  its  validity  against  himself,  unless 
he  either  did  not  know  or  it  could  not  be  held  that  he  ought 
to  have  known  it." 


Article  13.  If  the  party  fails  to  register  what 
must  be  registered  at  the  place  of  a  branch  estab- 
lishment, the  provisions  of  Art.  12  are  applicable 
only  to  transactions  carried  on  at  the  branch  estab- 
lishment. 

Art.  15,  par.  3,  of  the  German  Commercial  Code  provides 
that,  for  commercial  relations  with  a  branch  establishment 
inscribed  in  the  trade  register,  the  inscription  and  publica- 
tion by  the  court  in  whose  jurisdiction  such  branch  estab- 
lishment is  situated  is  conclusive  within  the  meaning  of 
these  enactments. 

Article  14.  Even  if  a  registration  is  contradictory 
to  the  publication,  the  former  can  be  set  up  as  a 
defense  against  third  parties. 

I.e.,  The  party  registering  is  not  responsible  for  the  negli- 
gence of  the  officer  of  the  court  or  the  editor  of  a  newspapef . 

Any  mistakes  or  omissions  of  fact  in  the  register  can  be 
corrected  on  the  application  of  the  party.  If  they  have  been 
made  through  the  willful  act  or  gross  negligence  of  the  officer 
of  the  court,  the  applicant  or  any  party  interested  can  claim 
damages.  See  Arts.  48  and  57  of  the  Procedure  in  Non- 
actionable  Matters. 


OF  COMMERCE  IN  GENERAL.  9 

Article  15.  If  things  already  registered  are 
changed  or  extinguished  afterwards,  such  change 
or  extinction  shall  be  registered  without  delay. 

For  instance,  an  infant  may  be  prohib'ted  from  continuing 
in  business  by  his  parents  or  guardians,  or  a  manager  of 
a  business  may  resign. 

SECTION  4.— TRADE  NAMES. 

Article  16.  A  trader  may  use  his  surname,  or 
full  name,  or  any  other  kind  of  name1  as  his  trade 
name.2 

1 A  trader  cannot,  however,  use  the  name  of  another  as  his 
trade  name. 

2  A  trader  is  under  no  obligation  to  have  a  trade  name.  But 
Art.  18,  par.  1,  of  the  German  Commercial  Code,  provides  that 
a  trader  who  carries  on  his  business  without  a  partner  or 
with  only  a  sleeping  partner,  must  make  use  of  his  surname 
with  at  least  one  of  his  unabbreviated  forenames  as  his  trade 
name.  Again,  in  Germany,  a  trader  can  sue  or  be  sued  in  his 
trade  name,  but  the  Supreme  Court  of  Japan  has  held  that 
a  trader  must  be  sued  in  his  own  proper  name,  which  in  Japan 
means  the  name  he  bears  in  the  official  census. 

Article  17.  A  business  association  shall,  according 
to  its  nature,  use  the  words  societe  en  nom  collectif, 
societe  en  commandite,  societe  anonyme,  or  societe 
en  commandite  par  actions  in  its  trade  name. 

This  is  an  exception  to  Art.  16,  because  a  business  associ- 
ation being  a  juristic  person  has  no  census  name  and  must 
have  a  trade  name  to  identify  itself. 

However,  this  does  not  mean  that  these  French  words  must 
be  used.  The  Japanese  words  for  these  four  companies  are 
as  follows: — 


10  COMMERCIAL  CODE  OF  JAPAN. 

1.  Gomel  Kaisha.     (Societe  en  nom  collectif.) 

2.  Goshi  Kaisha.     {Societe  en  commandite.) 

3.  Kabushiki  Kaisha.     (Societe  anonyme.) 

4.  Kabushiki  Goshi  Kaisha.  (Societe  en  commandite  par 
actions.) 

Arts.  19  and  20  of  the  German  Commercial  Code  read  as 
follows : — 

"Art.  19.  The  firm  name  of  an  ordinary  partnership 
(societe  en  nom  collectif)  must  include  the  name  of  at  least  one 
of  the  partners  with  an  addition  explanatory  of  the  existence 
of  partners  or  the  names  of  all  the  partners. 

"The  firm  name  of  a  commandite  company  (societe  en 
commandite)  must  include  the  name  of  at  least  one  of  the 
partners  personally  responsible,  with  some  addition  explain- 
ing the  existence  of  a  company. 

"No  prefixing  of  forenames  is  necessary. 

"The  firm  name  of  an  ordinary  partnership  or  a  com- 
mandite company  may  not  contain  other  names  than  those 
of  the  partners  who  are  personally  responsible." 

"Art.  20.  As  a  general  rule,  the  firm  name  of  a  limited 
liability  company  (societe  anonyme)  as  well  as  that  of  a 
commandite  company  divided  into  shares  (societe  en  com- 
mandite par  actions)  ought  to  be  derived  from  the  object  of 
the  undertaking.  The  former  firm  name  ought  in  addition 
to  include  the  words  'limited  liability  company'  and  the  latter 
'commandite  company  divided  into  shares.'  " 


Article  18.  If  no  business  association  exists,  a 
word  indicating  the  existence  of  a  business  association 
shall  not  be  used  in  the  trade  name.  This  pro- 
vision is  applicable  where  the  trader  has  succeeded 
to  the  business  of  a  business  association. 

Any  person  acting  in  violation  of  these  provisions 
is  punishable  by  a  fine  of  from  5  to  50  yen. 


OF  COMMERCE  IN  GENERAL.  11 

Art.  18,  par.  2,  of  the  German  Commercial  Code  provides 
that  no  addition  may  be  made  to  the  firm  name  which  shows 
the  existence  of  an  association  or  causes  deception  as  to  the 
nature  and  extent  of  the  business.  But  in  Japan,  only  the 
word  showing  the  existence  of  an  association,  if  such  is  not  the 
fact,  is  prohibited.  Other  words  having  no  connection  with 
the  business  may  be  added,  except  that  in  the  case  of  an 
insurance  association  no  words  other  than  "life  insurance," 
"fire  insurance,"  etc.,  are  allowed  to  be  added  which  might 
cause  a  deception  as  to  the  nature  and  extent  of  the  business. 

Article  19.  A  trade  name  already  registered  by 
another  person  cannot  be  registered  within  the 
•same  Shichoson  for  the  same  business. 

Art.  14  of  the  Rules  for  the  Operation  of  the  Commercial 
Code  provides  that  a  Shichoson  denotes  each  Ku  in  Tokyo, 
Saikyo  and  Osaka,  and  that,  in  the  places  where  the  city 
system  or  Choson  system  has  not  been  enforced,  it  denotes 
the  pre-existing  Choson,  territorial  administrative  divi- 
sion or  some  section  of  the  same  kind.  Thus,  Tokyo  City  is 
divided  into  several  "ku."  If  a  trader  has  already  regis- 
tered his  trade  name  in  one  "ku,"  other  persons  cannot 
register  the  same  trade  name  for  the  purpose  of  carrying  on 
the  same  business  in  the  same  "ku." 

As  to  the  administrative  divisions  of  Japan,  see  Art.  22, 
note,  infra. 

Art.  158  of  the  Procedure  in  Non-actionable  Matters  pro- 
vides that  no  registration  shall  be  allowed  unless  the  trade 
name  can  be  clearly  distinguished  from  the  trade  names 
already  registered  by  others.  Any  registration  in  violation  of 
this  rule  is  void  and  therefore  the  party  cannot  acquire  the 
right  of  using  such  trade  name. 

A  Japanese  trader  acquires  the  right  of  using  his  trade 
name  as  soon  as  the  trade  name  is  registered.  He  has  a 
right  to  register  it,  but  is  under  no  obligation  to  do  so.  On 
the  other  hand,  according  to  Art.  29  of  the  German  Commer- 


12  COMMERCIAL  CODE  OF  JAPAN. 

cial  Code,  every  trader  is  bound  to  register  his  trade  name 
and  the  address  of  his  place  of  business  in  the  court  within 
whose  jurisdiction  it  lies. 

The  registration  of  a  trade  name  has  a  different  object 
from  the  ordinary  commercial  registration,  such  as  the  regis- 
tration of  a  manager,  etc.;  the  latter  is  to  warrant  an  existing 
right,  the  former  to  create  a  new  right. 

Art.  30  of  the  German  Commercial  Code  provides  that 
every  trade  name  must  be  clearly  distinguishable  from 
those  existing  in  the  same  locality  or  district  and  already 
registered  in  the  trade  register;  and  that  if  a  merchant  has  the 
same  forenames  and  surnames  as  another  already  registered  in 
the  trade  register,  and  wishes  to  use  such  names  as  his 
trade  name,  he  must  add  a  note  to  distinguish  his  trade 
name  from  those  already  registered. 

Article  20.  He  whose  trade  name  has  been 
registered  can  ask  for  an  injunction  to  restrain  other 
persons  from  using  the  same  or  a  similar  trade  name 
for  the  purpose  of  unfair  competition.  In  such  case, 
damages  can  be  claimed. 

He  who  uses  the  trade  name  already  registered 
by  another  person  within  the  same  Shichoson  for 
the  same  business  is  presumed  to  use  it  for  the 
purpose  of  unfair  competition. 

As  the  purpose  of  unfair  competition  is  sometimes  hard 
to  prove,  the  law  raises  such  a  presumption  in  favor  of  the 
plaintiff.  But  if  the  same  or  a  similar  name  is  used  for  a 
different  business,  though  in  the  same  "shichoson,"  or  in  a 
different  "shichoson,"  though  for  the  same  business,  the 
burden  of  proof  would  not  be  on  the  defendant,  but  on  the 
plaintiff. 

Art.  37  of  the  German  Commercial  Code  provides  that 
any  one  who  uses  a  trade  name  which  is  not  his  property 
may  be  prevented  by  the  court  from  using  it,  and  be  liable 


OF  COMMERCE  IN  GENERAL.  13    -    - 

to  a  fine.  It  also  provides  that  any  one  finding  himself 
injured  by  a  third  person  unlawfully  using  a  trade  name  may 
demand  that  he  cease  so  to  use  it. 

Article  21.  The  transfer  of  a  trade  name  cannot 
be  set  up  as  a  defense  against  third  parties  unless 
such  transfer  has  been  registered. 

Such  registration  must  be  made  by  the  transferee.  See 
Art.  161  of  the  Procedure  in  Non-actionable  Matters. 

After  registration,  though  not  published,  the  transfer  is 
valid  against  third  parties  even  acting  in  good  faith  and 
committing  no  fault.  Thus,  the  rule  is  different  from  that 
relating  to  the  trade  register  (see  Art  12,  supra),  but  the 
same  as  that  provided  in  the  case  of  the  registration  of  real 
property  and  in  the  case  of  the  registration  of  the  formation 
of  a  business  association. 

Article  22.  In  case  both  the  trade  name  and  the 
business  are  transferred,1  unless  the  parties  ex- 
pressly provide  otherwise,  the  transferor  cannot 
carry  on  the  same  business  within  the  same  Shichoson 
for  a  period  of  twenty  years. 

If  the  transferor  has  promised  not  to  carry  on  the 
same  business,  such  promise  has  its  validity  only 
in  the  same  Fu  or  Ken2  for  a  period  not  more 
than  thirty  years.3 

The  transferor,  irrespective  of  the  provisions 
of  the  preceding  paragraphs,  cannot  carry  on  the 
same  business  for  the  purpose  of  unfair  competition.4 

1  Art.  23  of  the  German  Commercial  Code  provides  that  the 
trade  name  cannot  be  alienated  separately  from  the  business 
which  it  designates.  But  in  Japan,  the  trade  name  may  be 
transferred  without  transferring  the  business.     However,   a 


14  COMMERCIAL  CODE  OF  JAPAN. 

different  rule  exists  in  the  case  of  a  trade  mark.  Art.  6 
of  the  Japanese  Trade  Mark  Act  provides  that  no  trade 
mark  may  be  transferred  without  the  transfer  of  the  business 
which  it  designates. 

According  to  the  decision  of  the  Japanese  Supreme  Court, 
it  is  presumed  that  the  transfer  of  a  business  includes  the 
place  of  business,  credits,  good  will,  trade  books,  etc.  The 
transferee  also  assumes  the  debts  unless  the  agreement  pro- 
vides to  the  contrary. 

2  For  administrative  purposes  Japan  is  divided  into  three 
Fu  and  forty-two  Ken.  Though  the  Fu  is  larger  than  the 
Ken,  there  is  no  difference  in  the  organization ;  the  distinction 
in  name  and  extent  of  territory  is  purely  historical.  The  admin- 
istration of  each  Fu  or  Ken  is  under  the  direct  supervision  of 
the  Minister  of  the  Home  Affairs.  Each  Fu  or  Ken  is  divisible 
in  several  Guns  or  Shis.  A  Shi  is  a  local  administration  of  a 
city.  A  Gun  is  subdivided  into  Chosons.  The  Choson  is  the 
rural  local  administration.  The  administration  of  the  Choson 
is  subject  to  the  administration  of  the  Gun  and  the  adminis- 
tration of  the  Gun  or  the  administration  of  the  Shi  is  subject 
to  the  administration  of  the  Fu  or  Ken  in  which  it  is  situated. 
Only  the  Shi  and  the  Choson  have  complete  autonomy,  but 
each  administrative  organization  above  described  has  its 
major  assembly,  councils,  etc.  The  administrative  organi- 
zation is  detailed  in  three  statutes:  namely,  the  Statute  of 
Fu  Ken  System,  the  Statute  of  Gun  System,  and  the  Statute 
of  Shichoson  System. 

3  Thus,  if  the  transferor  promises  not  to  carry  on  the  busi- 
ness through  the  whole  country  for  thirty  years,  or  not  to 
carry  it  on  for  a  longer  period  than  thirty  years  in  the  same 
Fu  or  Ken,  such  a  contract  is  void  as  in  restraint  of  trade. 

4  For  instance,  as  far  as  this  provision  of  the  Code  is  con- 
cerned, the  transferor  may- carry  on  the  same  business  in  a 
place  near  to  the  place  in  which  his  old  business  is  carried 
on.  In  such  case,  however,  the  transferee  still  has  a  right  to 
complain  on  the  ground  of  unfair  competition. 


OF  COMMERCE  IN  GENERAL.  15 

Article  23.  The  provisions  of  Art.  22  are  applicable 
where  the  business  is  transferred  exclusive  of  the 
trade  name. 

Article  24.  If  a  person  has  abandoned  or  altered 
his  trade  name  already  registered,  and  such  abandon- 
ment or  alteration  is  not  registered,  the  parties 
interested  can  apply  to  the  court  for  the  cancelation 
of  the  registration  of  such  trade  name. 

On  the  application  mentioned  above,  the  court 
must  summon  the  person  whose  trade  name  has 
been  registered  to  make  objections  within  a  certain 
period  of  time  fixed  by  the  court,  and  if  no  objection 
is  made  during  such  period,  the  registration  shall 
be  instantly  canceled. 

Art.  31  of  the  German  Commercial  Code  provides  that 
any  alteration  in  the  trade  name  or  in  the  personnel  of  its 
proprietors,  as  well  as  any  transfer  of  the  place  of  business 
to  another  locality,  is  to  be  registered  in  the  trade  register; 
but  it  does  not  provide  that  a  party  interested  in  the  business 
has  a  right  to  apply  for  the  cancelation  of  the  trade  name. 


SECTION  5.— TRADE  BOOKS. 

Article  25.  A  trader  shall  keep  books,  in  which 
the  daily  dealings  and  all  such  facts  as  may  affect 
his  property  shall  be  systematically  and  clearly 
recorded;1  but  as  to  his  household  expenses,  it  is 
sufficient  to  record  the  total  amount  each  month.2 

As  for  the  dealings  of  retail  business,  only  the 
total  amount  of  every  day's  sale,  either  in  cash 
or  on  credit,  must  be  recorded. 


16  COMMERCIAL  CODE  OF  JAPAN. 

1  For  instance,  damages  caused  by  fire,  earthquake,  etc., 
or  any  obligation  arising  from  contract  or  tort,  are  to  be 
recorded  in  the  journal. 

Identical  with  Art.  38,  par.  1,  of  the  German  Commercial 
Code. 

2  There  is  no  provision  in  the  German  Code  for  an  account 
of  the  total  monthly  household  expenses.  According  to  the 
Law  of  Bankruptcy  of  Japan,  a  trader  may  become  respon- 
sible for  his  negligence  when  he  is  adjudged  bankrupt.  If 
he  has  squandered  his  property  or  incurred  an  extraordinary 
debt  through  his  prodigal  expenses  for  his  person  or  family, 
gambling,  speculation,  or  improper  mercenary  spirit,  he  is 
guilty  of  negligent  bankruptcy,  and  is  punishable  by  im- 
prisonment with  hard  labor  from  two  months  to  four  years. 

Thus,  in  the  Court  of  Bankruptcy,  the  account  of  the 
household  expense  will  serve  as  an  evidence  as  to  whether 
the  bankrupt  is  guilty  of  negligence  or  not. 

Article  26.  On  the  commencement  of  business 
or  on  the  registration  of  the  formation  of  a  company, 
and  at  a  certain  time  once  a  year,  a  balance  sheet 
and  a  general  inventory  of  movables,  immovables, 
credits,  debts  and  of  any  other  property  shall  be 
made  and  entered  in  the  books  prepared  for  that 
purpose. 

A  valuation  of  the  movables,  immovables,  credits 
and  other  property,  based  on  the  market  value 
at  the  time  of  making  the  inventory,  shall  be  inserted 
in  the  account. 

The  keeping  of  the  inventory  and  balance  sheet  as  well 
as  the  journal  is  said  to  be  in  the  duty  of  a  trader;  but  it  does 
not  follow  that  the  trader  who  fails  to  keep  them  is  necessarily 
liable  to  a  punitive  sanction,  except  in  case  of  bankruptcy. 
The  party  wilfully  keeping  a  false  record  or  negligently  fail- 


OF  COMMERCE  IN  GENERAL.  17 

ing  to  keep  his  trade  books  is  punishable  for  fraudulent  or 
negligent  bankruptcy.  A  different  rule  is  applied  to  a  busi- 
ness association.  If  the  directors  of  a  business  association 
fail  to  keep  the  inventory  or  balance  sheet  in  its  principal  or 
branch  offices,  do  not  record  what  they  ought  to  record,  or 
make  a  false  record,  they  are  punished  by  a  fine  of  from  five 
to  five  hundred  yen. 

In  regard  to  the  attitude  of  the  law  toward  trade  books, 
the  French  advocate  the  principle  of  interference,  and  the 
English  are  in  favor  of  the  laissez  faire  doctrine.  The 
Germans  take  a  middle  course:  that  is,  the  trader  is  obliged 
to  keep  trade  books,  but  they  are  not  subject  to  govern- 
mental inspection.  The  Japanese  Code  entirely  adopts  the 
German  system.  See  Art.  39  of  the  German  Commercial 
Code. 

Article  27.  In  a  company  which  distributes 
profits  more  than  once  a  year,  its  inventory  and 
balance  sheet  shall  be  made  at  the  time  of  each 
distribution  according  to  the  provisions  of  Art.  26. 

Article  28.  A  trader  shall  preserve  his  trade 
books  and  any  correspondence  in  connection  with 
his  business  for  ten  years.1 

As  to  the  preservation  of  trade  books,  such  period 
of  time  begins  to  run  as  soon  as  the  books  are  closed.2 

1  The  heir  of  the  trader  has  the  same  duty,  but  a  transferee 
of  the  business  is  not  under  the  obligation  to  preserve  the 
trade  books  of  his  transferor. 

2  This  article  is  identical  with  Art.  44  of  the  German  Com- 
mercial Code. 

SECTION  6.— TRADE  EMPLOYEES. 

Article  29.  A  trader  may  appoint  a  manager 
to  carry  on  business  for  him  either  in  his  principal 
office  or  in  a  branch  establishment. 


18  COMMERCIAL  CODE  OF  JAPAN. 

Here  the  word,  "manager"  is  the  equivalent  of  the  "pro- 
kurist"  in  the  German  Commercial  Code.  See  Sect.  5  of  the 
German  Commercial  Code. 


Article  30.  A  manager  has  authority  to  do  all 
acts  in  court  or  outside  of  court  representing  the 
employer,  in  regard  to  his  business.1 

A  manager  may  appoint  or  dismiss  the  head 
clerk,  clerks,  or  other  employees. 

Any  restriction  on  the  authority  of  a  manager 
cannot  be  set  up  as  a  defense  against  third  parties 
acting  in  good  faith.2 

1 1,  e.,  A  manager  has  the  right  to  represent  his  employer 
in  all  acts  connected  with  the  prosecution  of  the  business, 
whether  ordinary  business  transactions  or  the  collection  and 
defense  of  claims  in  court. 

Identical  with  Art.  49,  par.  1,  of  the  German  Commercial 
Code. 

2  Identical  with  Art.  50,  par.  1,  of  the  German  Commercial 
Code. 

Article  31.  The  employer  shall  register  the 
appointment  of  a  manager  or  the  termination  of 
his  authority  with  the  court  at  the  place  of  the 
principal  office  or  at  the  place  of  any  branch  estab- 
lishment for  which  such  manager  is  appointed. 

Identical  with  Art.  53,  pars.  1  and  4,  of  the  German  Com- 
mercial Code. 

Article  32.  A  manager  without  the  consent  of 
his  employer  cannot  carry  on  commercial  transactions 
or   become   a   member   of   unlimited   liability   of   a 


OF  COMMERCE  IN  GENERAL.  19 

business  association,  either  on  his  own  account  or 
on  account  of  third  persons. 

If  a  manager,  in  violation  of  these  provisions, 
has  carried  on  commercial  transactions  for  himself, 
the  employer  may  consider  such  transactions  as 
done  on  his  account.1 

If  the  employer  fails  to  exercise  this  right  within 
two  weeks  after  he  has  been  informed  of  such  trans- 
actions, or  if  one  year  has  elapsed  from  the  time  of 
such  transactions,  he  can  no  longer  enforce  such 
right  against  the  manager.2 

1  The  employer  has  a  right  of  election  by  which  he  may 
either  consider  the  transactions  as  done  on  his  account  in 
case  the  transactions  are  profitable,  or  sue  for  damages  if 
they  are  not  profitable. 

2  There  are  no  such  provisions  in  the  German  Commercial 
Code  as  in  this  article,  except  that  Art.  60  provides  that  a 
clerk  cannot,  without  the  consent  of  his  principal,  either  do 
any  business  on  his  own  account  or  carry  on  a  business  similar 
to  that  of  his  principal  for  himself  or  a  stranger,  and  in  case 
a  clerk  infringes  this  regulation,  the  principal  (Art.  61)  has 
a  right  to  consider  the  transaction  as. done  on  his  account. 
On  the  other  hand,  a  Japanese  clerk  is  not  subject  to  this  rule. 

Article  33.  A  trader  may  appoint  the  head  clerk 
or  clerks  and  authorize  them  to  do  certain  classes 
of  acts  or  particularly  specified  matters. 

The  head  clerk  or  clerks  have  authority  to  do  all 
acts  in  regard  to  the  matters  intrusted  to  them. 

The  legal  status  of  clerks  differs  from  that  of  the  manager 
in  the  following  manner: — 

1.  The  clerks  are  special  agents. 

2.  They  may  be  appointed  either  by  the  employer  or  by 
the  manager. 


20  COMMERCIAL  CODE  OF  JAPAN. 

3.  The  appointment  of  clerks  need  not  be  registered. 

4.  Restrictions  upon  the  authority  of  clerks  can  be  set 
up  as  a  defense  against  third  parties  even  though  they  have 
no  notice  of  the  restrictions. 

5.  Clerks  may  do  any  commercial  act  for  themselves  or 
others  without  the  consent  of  their  employer. 

Article  34.  Employees  other  than  a  manager, 
head  clerk  or  clerks,1  are  presumed  to  have  no 
authority  to  do  juristic  acts2  for  the  benefit  of  the 
employer. 

x  I.e.,  Apprentices. 

2  A  juristic  act  is  denned  to  be  a  manifestation  of  will,  the 
purpose  of  which  is  to  produce  a  legal  effect  of  a  private 
nature  where  the  purpose  is  carried  out  by  law  according 
to  the  expectation  of  the  party  who  manifests  the  will.  Thus, 
if  a  man  tells  his  servant  to  shut  the  door,  this  is  a  mani- 
festation of  will,  but  still  not  a  juristic  act;  for  the  effect  to  be 
produced  is  the  effect  of  fact,  not  the  effect  of  law.  Nor  is 
the  act  of  bringing  an  action  in  the  court  a  juristic  act;  for 
procedure  is  a  branch  of  public  law  and  therefore  the  act  of 
bringing  a  suit  at  law  does  not  produce  a  legal  effect  of  a 
private  nature.  Again,  if  a  man  sets  fire  to  his  own  house 
with  the  expectation  of  acquiring  an  indemnity  from  an  in- 
surance company,  the  law  will  not  enforce  such  an  effect  as 
he  expects,  and  consequently  his  act  is  not  a  juristic  act. 
But  a  juristic  act  is  not  necessarily,  though  generally,  a  con- 
tract. The  act  of  one  party  alone  without  an  aggregatio 
mentium  is  no  less  a  juristic  act.  For  examples,  a  donation, 
the  making  of  a  will,  the  ratification  or  rescission  of  a  contract 
by  an  infant,  etc.,  are  juristic  acts. 

Article  35.  So  far  as  the  relation  between  em- 
ployer and  employee  is  concerned,  the  provisions  of 
Arts.  29-34  do  not  affect  the  application  of  the 
provisions  of  the  Civil  Code. 


OF  COMMERCE  IN  GENERAL.  21 

SECTION  7.— COMMERCIAL  AGENTS. 

Article  36.  A  commercial  agent  is  not  an  em- 
ployee,1 but  a  person  who  acts  permanently  for 
a  definite  trader2  as  a  representative  or  a  middle- 
man3 in  commercial  transactions  within  the  scope 
of  the  business  of  such  trader. 

1  The  commercial  agent  being  an  independent  trader,  all 
provisions  concerning  the  trade  register,  trade  name  and 
trade  books  are  applicable  to  him. 

2  Those  who  act  as  agents  for  any  trader  who  may  apply 
to  them  are  not  commercial  agents  within  the  meaning  of  the 
present  article.  By  acting  for  a  definite  trader,  the  com- 
mercial agent  is  different  from  a  broker. 

3  A  representative  within  the  meaning  of  this  article  is  one 
authorized  to  do  a  juristic  act  as  defined  by  Art.  643  of  the 
Civil  Code.  By  a  middleman  is  meant  one  who  is  authorized 
to  do  a  non- juristic  act  within  the  meaning  of  Art.  656  of  the 
Civil  Code. 

Article  37.  If  a  commercial  agent  has  acted  as 
a  representative  or  a  middleman  in  commercial 
transactions,  he  shall  give  notice  to  his  principal 
without  delay. 

According  to  the  principle  of  the  Civil  Code,  an  agent  is 
only  obliged  to  make  a  report  on  the  principal's  demand, 
but  in  commercial  transactions  such  demand  is  unnecessary. 
See  Arts.  645  and  646  of  the  Civil  Code. 

Similar  to  Art.  84,  par.  2,  of  the  German  Commercial 
Code. 

Article  38.  A  commercial  agent,  without  the 
consent  of  his  principal,  cannot  carry  on  commercial 
transactions    within    the    scope    of    the    principal's 


22  COMMERCIAL  CODE  OF  JAPAN. 

business,  or  become  a  member  of  unlimited  liability 
of  a  business  association,  doing  the  same  business, 
either  on  his  own  account  or  on  account  of  third 
persons. 

If  a  commercial  agent  acts  in  violation  of  these 
provisions,  Art.  32,  pars.  2  and  3,  is  applicable. 

Here  the  duty  of  a  commercial  agent  is  different  from 
that  of  a  manager.  The  latter  is  absolutely  prohibited  from 
doing  any  commercial  transaction  or  becoming  a  member  of 
any  company  in  which  he  would  be  unlimitedly  liable  for  the 
debts.  The  commercial  agent,  however,  is  only  prohibited 
from  carrying  on  a  commercial  transaction  within  the  scope 
of  the  principal's  business  or  becoming  a  member  of  unlimited 
liability  in  a  company  doing  the  same  business.  See  Art.  32, 
supra. 

Article  39.  A  commercial  agent  intrusted  with 
the  sale  of  goods  has  authority  to  receive  notice  in 
regard  to  the  defect  or  deficiency  of  the  goods  and  to 
the  performance  of  the  contract  of  sale. 

According  to  the  rule  of  the  Civil  Law,  whether  an  agent 
entrusted  with  the  sale  of  goods  has  authority  to  receive  such 
a  notice  entirely  depends  on  the  original  contract  between 
the  principal  and  the  agent,  and  consequently  the  vendee 
is  obliged  to  examine  the  nature  and  extent  of  the  contract. 
In  order  to  prevent  this  inconvenience,  the  Commercial  Law 
provides  an  exception  to  this  rule,  and  gives  the  commercial 
agent  authority  to  receive  the  notice.  Thus,  if  the  vendee 
discovers  that  the  goods  are  defective,  he  may  directly  claim 
damages,  or  the  termination  of  the  contract'  or  the  deduction 
of  the  price  from  the  agent.  Notice  to  the  agent  has  the 
same  effect  as  notice  to  the  principal. 

Derived  from  Art.  86,  par.  2,  of  the  German  Commercial 
Code. 


OF  COMMERCE  IN  GENERAL.  23 

Article  40.  If  the  parties  have  not  fixed  the 
duration  of  the  contract  of  agency,  each  party  may 
terminate  the  contract  on  notice  given  two  months 
before  the  termination. 

In  case  of  an  unavoidable  necessity,1  each  party 
may  terminate  the  contract  at  any  time  irrespective 
of  whether  the  duration  of  the  contract  has  been 
fixed  or  not.2 

1  What  is  an  unavoidable  necessity  is  a  question  of  act 
which  is  to  be  decided  by  the  court.  For  instance,  if  a 
commercial  agent  is  called  to  serve  in  the  army,  in  case  of  war, 
this  would  be  an  unavoidable  necessity  and  terminate  the 
contract  of  agency. 

2  This  article  is  an  exception  to  the  rule  of  the  Civil  Code, 
under  which  each  party  to  a  contract  of  agency  has  a  right 
to  terminate  it  at  any  time.  See  Art.  651  of  the  Civil 
Code. 

This  article  is  identical  with  Art.  92  of  the  German  Com- 
mercial Code  except  that  in  the  latter  the  notice  must  be 
given  six  weeks  before  the  termination  of  the  contract. 

Article  41.  A  commercial  agent  has  a  lien  on  all 
the  property  of  his  principal  in  his  possession  for 
any  claim  arising  out  of  the  contract  of  agency, 
except  where  the  contract  provides  that  the  agent 
shall  not  have  such  a  lien. 

This  is  an  exception  to  the  rule  stated  in  Art.  295  of  the 
Civil  Code.  According  to  that  article,  a  person  has  a  right 
to  retain  the  property  of  another  until  any  claim  arising 
from  the  same  property  is  satisfied,  but  he  has  no  lien  on 
property  which  has  no  connection  with  such  claim. 


BOOK  II. 

BUSINESS  ASSOCIATIONS. 


SECTION  1.— GENERAL  PROVISIONS. 

Article  42.  A  business  association  within  the 
meaning  of  this  Code  is  an  association  formed  for  the 
purpose  of  carrying  on  commercial  transactions  as  a 
business. 

The  reader  will  find  a  short  account  of  the  business  associa- 
tions of  Japan  and  under  the  Continental  Codes,  in  two 
articles  by  the  present  editor,  University  of  Pennsylvania 
Law  Review,  Vol.  58,  pp.  1  and  61. 

There  are  two  kinds  of  juristic  persons  under  the  Civil 
Code:  (1)  association,  the  organization  of  persons;  (2) 
trust  property,   the  organization  of  property. 

Thus,  a  business  association  is  a  trader  within  the  meaning 
of  Art.  4. 

Article  43.  Business  associations  are  divided  into 
four  kinds:  societe  en  nom  collectif,  soctite  en  com- 
mandite, societe  anonyme,  and  society  en  commandite 
par  actions. 

Article  44.  A  business  association  is  a  juristic 
person. 

The  residence  of  a  business  association  is  at  the 
place  of  its  principal  office. 

There  is  no  such  provision  in  the  German  Commercial 
Code.     It  is  maintained  by  the  majority  of  the  jurists  of 


26  COMMERCIAL  CODE  OF  JAPAN. 

that  country  that  the  societe  en  nom  collectif,  societe  en  com- 
mandite, and  societe  en  commandite  par  actions  are  not  juristic 
persons.  On  the  other  hand,  a  business  association  is  con- 
strued as  a  juristic  person  in  France,  though  there  is  no 
express  provision  in  the  French  Commercial  Code  to  that 
effect.  The  Commercial  Codes  of  Belgium  and  Spain  are 
the  only  commercial  codes  besides  the  Japanese,  which 
expressly  provide  that  a  business  association  is  a  juristic 
person. 

The  legal  effects  of  being  a  juristic  person  are  as  follows : — 

1.  The  property  of  the  association  will  be  independent  of 
the  property  of  its  members  or  shareholders.  A  debtor  of 
the  association  cannot  set  off  against  the  claim  of  the  associa- 
tion a  debt  due  him  by  a  member  of  the  association. 

2.  The  association  will  have  an  independent  residence. 

3.  The  association  can  be  put  in  bankruptcy  independently 
of  its  members  or  shareholders. 

4.  The  association  will  be  capable  of  suing  or  being  sued. 

5.  The  association  will  be  obliged  to  make  a  registration 
in  the  court. 

Article  45.  The  existence  of  a  business  associa- 
tion cannot  be  set  up  as  a  defence  against  third 
parties  unless  the  formation  of  such  business  asso- 
ciation is  registered. 

Derived  from  Arts.  123,  par.  1,  and  200,  par.  1,  sentence  1, 
of  the  German  Commercial  Code. 

Article  46.  A  business  association  cannot  make 
preparation  to  begin  business  before  it  is  registered 
at  the  place  of  its  principal  office. 

Art.  123,  par.  2,  of  the  German  Commercial  Code  provides 
that  if  a  societe  en  nom  collectif  begins  its  business  before  it 
is  registered,  its  legal  relations  begin  at  the  same  time. 
This  provision  is  also  applicable  to  a  societe  en  commandite. 


BUSINESS  ASSOCIATIONS.  27 

Art.  200,  par.  1,  of  the  German  Commercial  Code  provides 
that  any  act  done  by  a  societe  anonyme  in  the  name  of  the 
association  before  it  is  registered  personally  binds  the  person 
who  has  done  it,  and  if  several  persons  participate  in  doing 
it,  they  are  jointly  and  severally  liable.  These  provisions  are 
applicable  to  a  societe  en  commandite  par  actions. 

Article  47.  If  a  business  association  does  not 
open  business  within  six  months  after  it  has  been 
registered,  the  court  may  dissolve  it  on  the  appli- 
cation of  the  attorney-general  or  by  exercising  its 
executive  power.  But  if  there  is  reasonable  cause, 
such  period  of  time  may  be  extended  on  the  appli- 
cation of  the  association. 

In  Japan,  as  in  all  civil  law  countries,  the  courts  have 
certain  administrative  power  which  they  may  exercise  on  their 
own  initiative.  This  is  the  fundamental  difference  between 
the  civil  and  the  common  law  conceptions  of  a  court. 

Article  48.  If  a  business  association  acts  contrary 
to  the  public  order  or  good  morals,  the  court  may 
dissolve  it  on  the  application  of  the  attorney-general 
or  by  exercising  its  executive  power. 


SECTION  2.— SOCIETE  EN  NOM  COLLECTIF. 

Sub- Section  1. — Formation. 

Article  49.  Articles  of  association  shall  be  made 
on  the  formation  of  a  societe  en  nom  collectif. 

The  association  begins  to  have  its  existence  as  soon  as  the 
written  contract  is  made.  The  doctrine  that  such  a  written 
contract  is  essential  to  the  existence  of  an  association  is  de- 
rived from  the  French  system  of  jurisprudence.     It  is  quite 


28  COMMERCIAL  CODE  OF  JAPAN. 

unnecessary  in  Germany  to  observe  such  formality;  for  in 
Germany  a  societe  en  nom  collectif  may  be  formed  by  an 
implied  intention. 

Article  50.  The  following  particulars  shall  be  set 
forth  in  the  articles  of  association,  with  the  signa- 
tures of  all  the  members: — 

1.  The  object  of  the  association. 

2.  Its  trade  name. 

3.  The  names  and  residences  of  the  members. 

4.  The  place  of  the  principal  office  and  the  place 
of  each  branch  establishment. 

5.  The  nature  and  value  or  basis  of  valuation  of 
the  contributions  of  the  members. 

Article  51.  Within  two  weeks  after  the  making 
of  the  articles  of  association,  the  association  shall 
register  the  following  particulars  at  the  place  of  the 
principal  office  and  the  place  of  any  branch  estab- 
lishment : — 

1 .  The  particulars  enumerated  in  Art.  50,  Nos.  1-3. 

2.  The  principal  office  and  each  branch  establish- 
ment of  the  association. 

3.  The  date  of  its  formation. 

4.  The  term  for  its  existence  or  causes  for  its 
dissolution,  if  such  term  or  causes  have  been  fixed. 

5.  The  nature  of  the  contributions  of  the  mem- 
bers and  the  value  of  the  property  contributed. 

6.  The  names  of  the  members  who  are  to  repre- 
sent the  association,  if  such  members  have  been 
designated. 

If  a  branch  office  is  established  after  the  forma- 
tion of  the  association,  the  registration  mentioned 


BUvSINESS  ASSOCIATIONS.  29 

above  shall  be  made  at  the  place  of  such  branch 
establishment  within  two  weeks,  and  the  fact  that 
such  branch  office  is  established  shall  be  registered 
at  the  place  of  the  principal  office  and  the  place  of 
any  other  branch  office  within  the  same  period  of 
time. 

If  a  new  branch  office  is  established  within  the  same 
province  as  the  court  which  has  jurisdiction  over  the 
place  of  the  principal  office  or  the  place  of  any  other 
branch  establishment,  it  is  sufficient  to  register  the 
fact  that  such  branch  office  is  established. 

Art.  106  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"The  partnership  (societe  en  nom  collectif)  must  make 
a  declaration  before  the  court  within  whose  jurisdiction  its 
place  of  business  is,  which  must  include, — 

1.  The  names,  forenames,  profession  and  place  of  abode 
of  each  member. 

2.  The  firm  name  of  the  company  and  the  place  where 
it  carries  on  business. 

3.  The  date  when  the  partnership  was  formed. 

Article  52.  When  the  principal  office  or  any 
branch  establishment  is  removed  to  another  place, 
the  registration  of  such  removal  shall  be  made  at 
the  former  place  within  two  weeks ;  and  the  registra- 
tion mentioned  in  Art.  51,  par.  1,  shall  be  made  at 
the  new  place  within  the  same  period  of  time. 

If  the  principal  office  or  a  branch  establishment 
is  removed  to  a  place  within  the  jurisdiction  of  the 
sarrie  court,  only  such  removal  shall  be  registered. 

Article  53.  If  any  alteration  takes  place  in  the 
particulars    enumerated    in    Art.    51,    par.    1,    such 


30  COMMERCIAL  CODE  OF  JAPAN. 

alteration  shall  be  registered  at  the  place  of  the 
principal  office  and  the  place  of  any  branch  estab- 
lishment within  two  weeks. 

Art.  107  of  the  German  Commercial  Code  reads  as 
follows : — 

"If  the  firm  name  of  the  partnership  {societe  en  now 
collectif)  is  changed,  or  the  business  carried  on  in  another 
place,  or  if  a  new  member  enters  into  the  partnership,  this 
has  also  to  be  entered  in  the  trade  register." 

Sub- Section  2. — The  Internal  Relations  of  the  Association. 

Article  54.  In  regard  to  the  internal  relations  of 
the  association,  the  provisions  of  the  Civil  Code 
concerning  partnership  are  applicable,  unless  the 
articles  of  association  or  this  Code  provide  to  the 
contrary. 

A  partnership  under  the  Civil  Code  is  a  contract  under 
which  each  party  promises  to  contribute  money,  property 
or  service  for  the  purpose  of  carrying  on  a  common  enterprise. 
The  special  characteristic  of  this  partnership  is  that  unless 
a  joint  liability  is  created  by  a  special  contract,  a  mere  con- 
tract of  partnership  does  not  make  the  partners  jointly 
liable  for  partnership  debts,  though  each  of  them  is  un- 
limitedly  liable  for  his  own  share  of  the  partnership  debts. 
Such  a  partnership  is  not  necessarily  a  commercial  organ- 
ization. Even  an  educational  institution  or  a  scientific 
association  may  be  a  partnership  provided  it  has  not  been 
incorporated.  See  University  of  Pennsylvania  Law  Review, 
Vol.  58,  p.  1. 

Article  55.  If  debts  are  assigned  to  the  company 
by  a  member  as  his  contribution,  such  member  is 
responsible  for  the  payment  on  default  of  the  debtor. 


BUSINESS  ASSOCIATIONS.  31 

In  such  case,  the  member  is  not  only  liable  for  the 
interest  but  also  for  damages. 

When  such  contribution  is  made,  the  debts  must  be 
completely  assigned  to  the  association.  If  the  debts  are 
non-negotiable,  the  debtor  must  be  duly  informed  by  the 
original  creditor,  or  the  consent  of  the  debtor  must  be  ob- 
tained. If  they  are  negotiable,  the  instruments  must  be 
properly  indorsed  and  delivered.  In  case  of  a  government 
bond,  a  mere  delivery  is  sufficient.  See  Arts.  467,  469  and 
473  of  the  Civil  Code. 

Article  56.  In  the  absence  of  a  special  provision 
in  the  articles  of  association,  each  member  has  a 
right  as  well  as  a  duty  to  manage  the  business  of  the 
company. 

Identical  with  Art.  114  of  the  German  Commercial  Code. 

Article  57.  The  appointment  or  dismissal  of  a 
manager  is  performed  by  the  majority  of  the  mem- 
bers, even  if  certain  members  have  been  appointed 
for  the  management  of  the  business. 

Art.  116,  pars.  3  and  4,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  appointment  of  an  agent  necessitates  the  approval 
of  all  the  managing  partners  unless  there  is  danger  in  delaying 
to  appoint. 

"Revocation  of  the  agent's  authority  can  be  made  by 
any  one  of  the  partners  having  authority  to  make  the  ap- 
pointment or  to  concur  in  making  the  appointment." 

Article  58.  The  alteration  of  the  articles  of  asso- 
ciation or  any  act  beyond  the  scope  of  the  object 
of  the  association1  cannot  be  effected  without  the 
agreement  of  all  the  members.2 


32  COMMERCIAL  CODE  OF  JAPAN. 

1  According  to  the  report  made  by  the  committee  for 
compiling  the  Commercial  Code,  when  an  association  makes 
a  donation  to  some  charitable  institution,  it  is  an  act  beyond 
the  scope  of  the  purpose  of  the  association. 

2  Identical  with  Art.  116,  par.  2,  of  the  German  Commercial 
Code. 

Article  59.  If  a  member  transfers  the  whole  or 
part  of  his  interest  in  the  association  to  a  third 
person  without  the  consent  of  the  other  members, 
such  a  transfer  cannot  be  set  up  as  a  defence  against 
the  association. 

I.e.  Though  such  a  transfer  is  valid  between  the  transferor 
and  the  transferee,  the  transferor  is  still  liable  to  the  associa- 
tion as  a  member,  if  the  association  holds  him. 

This  is  a  provision  derived  from  the  old  German  Com- 
mercial Code. 

Article  60.  A  member  without  the  consent  of  the 
other  members  cannot  carry  on  commercial  trans- 
actions within  the  scope  of  the  business  of  the  asso- 
ciation or  become  a  member  of  unlimited  liability 
of  any  other  business  association  doing  the  same 
business,  either  on  his  own  account  or  on  account 
of  third  persons. 

If  a  member  in  violation  of  these  provisions  carries 
on  commercial  transactions  for  himself,  the  other 
members  on  a  conclusion  of  the  majority  may  con- 
sider them  as  done  on  account  of  the  association. 

If  the  other  members  fail  to  exercise  such  right 
within  two  weeks  after  one  of  them  has  been  informed 
of  such  transactions  or  if  one  year  has  elapsed  from 


BUSINESS  ASSOCIATIONS.  33 

the  time  of  such  transactions,  they  can  no  longer 
enforce  such  right  against  the  member. 

This  article  is  derived  from  Arts.  112  and  113  of  the 
German  Commercial  Code. 

Sub-Section  3. — The  External  Relations  of  the  Association. 

Article  61.  If  particular  members  of  the  associa- 
tion have  not  been  appointed  representative  mem- 
bers by  the  articles  of  association  or  by  agreement 
of  all  the  members,  each  member  represents  the 
association. 

The  representation  of  the  association  is  distinguished 
from  the  management  of  the  business  of  the  association,  the 
former  arising  from  the  external  relation  and  the  latter  from 
the  internal  relation.  All  the  Codes  based  on  the  German 
system  generally  recognize  such  a  distinction.  On  the 
other  hand,  under  the  French  system,  these  two  rights  are 
confounded.     See  Art.  125  of  the  German  Commercial  Code. 

Article  62.  A  representative  member  of  the  asso- 
ciation has  authority  to  do  all  acts  in  court  or 
outside  of  court  in  regard  to  the  business  of  the 
company.1 

The  provisions  of  Arts.  44,  par.  1,  and  54  of  the 
Civil  Code  are  applicable  to  a  societe  en  nom  col- 
lectif.2 

1  Identical  with  Art.  126,  par.  1,  of  the  German  Com- 
mercial Code. 

2  Art.  44,  par.  1,  of  the  Civil  Code  provides  that  a  juristic 
person  is  responsible  for  damage  done  to  third  persons  by  its 
directors  or  other  representatives.  Art.  54  of  the  same  Code 
provides  that   any  restriction  on  the  authority  of  the  direc- 


34  COMMERCIAL  CODE  OF  JAPAN. 

tors  cannot  be  set  up  as  a  defense  against  third  parties 
acting  in  good  faith. 

Art.  126,  par.  2,  of  the  German  Commercial  Code  reads  as 
follows : — 

"A  limitation  of  authority  to  represent  is  of  no  effect  against 
a  third  person,  especially  in  the  case  of  a  limitation  that  shall 
extend  the  representation  only  to  certain  transactions  or  class 
of  transactions,  or  that  shall  hold  good  only  under  certain 
circumstances  or  for  a  certain  time  or  place." 

Article  63.  If  the  debts  of  the  association  cannot 
be  satisfied  out  of  its  assets,  each  member  is  jointly 
liable  for  the  payment. 

A  creditor  of  the  association  cannot  sue  the  individual 
members  unless  he  avers  that  he  cannot  be  satisfied  out  of  the 
firm  assets.  He  has  practically  to  show  either  that  the 
association  is  in  bankruptcy  or  that  he  has  sued  the  associa- 
tion and  failed  of  satisfaction.  In  other  words,  the  individual 
members  are  not  principal  debtors,  but  "accessory  debtors." 
On  the  other  hand,  under  the  German  Code,  as  well  as  the 
Hungarian  Code,  the  members  of  the  association  are  treated 
as  principal  debtors.  A  creditor  of  the  association  has  a 
right  of  election  to  sue  either  the  association  or  the  individual 
members,  or  the  association  and  its  members  jointly.  Thus, 
the  Japanese  treat  the  societe  en  nom  collectif  as  an  entity; 
the  Germans  treat  it  as  a  partnership.  The  present  article 
is  probably  derived  from  the  Commercial  Codes  of  Italy  and 
Belgium:  in  the  former  it  is  provided  that  no  claim  can  be 
made  against  the  members  unless  the  right  of  action  has  been 
exercised  against  the  company;  the  latter  provides  that  there 
can  be  no  judgment  against  the  members  unless  there  has 
been  a  judgment  rendered  against  the  association.  The 
Code  federal  des  obligations  of  Switzerland  has  a  similar 
provision. 

I  have  used  the  term  "accessory  debtor"  to  describe  the 
relation   between  the   members   of  the   association  and   the 


BUSINESS  ASSOCIATIONS.  35 

creditors,  as  the  relation  has  no  exact  counterpart  in  the 
English  and  American  common  law.  Under  the  Civil  Code, 
a  surety  is  an  accessory  debtor.  If  he  can  show  that  the 
principal  debtor  is  able  to  perform  the  debt  and  that  such  a 
performance  can  be  easily  enforced,  the  creditor  is  obliged 
to  exhaust  the  property  of  the  principal  debtor.  Strictly 
speaking,  the  members  of  the  societe  en  nom  collect^  are 
neither  principal  debtors  nor  sureties;  for  according  to  the 
Japanese  Civil  Code,  in  case  there  are  several  sureties,  they 
are  not  jointly  liable  to  the  creditor. 

Article  64.  A  member  who  has  been  admitted  to 
the  association  after  its  formation  is  responsible 
for  the  debts  incurred  before  his  admission  to 
membership. 

This  provision  is  identical  with  Art.  130,  par.  1,  of  the 
German  Commercial  Code.  Under  that  Code,  any  agreement 
contrary  to  such  provision  is  of  no  effect  against  third  parties. 
It  is  also  held  in  France  that  a  new  member  must  be  liable 
for  the  old  debt,  but  this  liability  can  be  dispensed  with  by 
a  contract  between  the  members.  Again,  the  new  member's 
liability  for  the  old  debt  is  recognized  by  Art.  89  of  the  Hun- 
garian Commercial  Code,  Art.  78  of  the  Italian  Commercial 
Code  and  Art.  565  of  the  Code  federal  des  obligations  of  Switzer- 
land. The  theory  that  a  member  is  not  liable  for  debts 
contracted  by  the  societe  en  nom  collectij  prior  to  his  admis- 
sion as  a  member  prevails  only  in  England  and  the  jurisdic- 
tions under  its  system. 

Article  65.  If  a  person,  though  not  a  real  mem- 
ber, does  an  act  which  may  induce  other  persons  to 
believe  that  he  is  a  member,  he  shall  be  responsible 
as  a  member  to  the  third  parties  acting  in  good 
faith. 


36  COMMERCIAL  CODE  OF  JAPAN. 

No  such  provisions  can  be  found  in  the  German  Com- 
mercial Code  or  other  continental  codes.  Probably  this 
article  is  of  an  English  origin,  expressing,  as  it  does,  a  rule 
corresponding  to  the  "partnership  by  estoppel"  of  the  common 
law. 

Art.  113  of  the  First  Japanese  Commercial  Code  provides 
that  a  person  shall  be  liable  as  a  member  to  third  persons 
in  the  following  cases: 

1.  If  he  allows  his  name  to  be  used  in  the  trade  name. 

2.  If  he  participates  in  the  management  of  the  business. 

3.  If  he  enjoys  the  rights  and  assumes  the  duties  of  a 
member. 

Article  66.  A  decrease  of  the  contribution  of  a 
member  cannot  be  set  up  as  a  defense  against  the 
creditors  of  the  company  unless  such  decrease  is  not 
objected  to  by  the  creditors  within  two  years  after 
it  has  been  registered  at  the  place  of  the  principal 
office. 

Article  67.  An  association  cannot  distribute  profits 
before  any  impairment  of  its  capital  has  been  made 
good.  If  profits  are  distributed  in  violation  of  this 
provision,  the  creditors  of  the  company  may  demand 
that  they  be  refunded. 

There  are  no  such  provisions  in  the  German  Commercial 
Code.  The  provisions  concerning  the  reduction  of  capital  are 
derived  from  the  Italian  Commercial  Code. 

Sub-Section  4.— The  Retirement  of  Members. 

Article  68.  If  articles  of  association  have  failed  to 
stipulate  for  the  duration  of  the  association  or  have 
stipulated  that  the  association  shall  last  as  long  as 


BUSINESS  ASSOCIATIONS.  37 

the  life  of  a  certain  member,1  any  member  may 
retire  at  the  end  of  a  business  year.  But  in  such 
case  a  notice  must  be  given  six  months  before  such 
retirement. 

In  case  of  unavoidable  necessity,  a  member  may 
retire  at  any  time,  irrespective  of  whether  the 
articles  of  association  have  or  have  not  stipulated 
for  the  period  of  the  duration  of  the  company.2 

1  The  result  of  this  provision  is,  that  a  provision  that  the 
association  shall  continue  as  long  as  one  of  its  members  shall 
live  is  illegal  or  at  least  is  not  effective. 

2  According  to  the  German  Commercial  Code,  a  cause  of 
the  retirement  of  a  member  is  a  cause  of  the  dissolution  of  the 
association.  In  Europe,  the  Codes,  either  of  the  German 
or  of  the  French  system,  except  the  Italian  Commercial  Code, 
do  not  recognize  that  the  members  of  a  societe  en  nom  collectif 
or  societe  en  commandite  may  independently  retire  without 
effecting  the  dissolution  of  the  company.  As  the  Japanese 
societe  en  nom  collectif  is  considered  as  a  juristic  person,  so  the 
provision  of  the  Italian  Code  is  adopted  in  order  to  accord  with 
the  entity  theory.  Consequently,  though  provisions  similar  to 
the  present  article  are  found  in  the  German  Commercial 
Code,  Arts.  132,  133,  134,  the  latter  provide  that  the  retire- 
ment of  a  member  and  the  dissolution  of  the  association  are 
simultaneous  events. 

Article  69.  In  addition  to  the  cases  mentioned  in 
Art.  68,  a  person  will  cease  to  be  a  member  of  the 
association, — 

1.  On  the  happening  of  any  cause  mentioned  in 
the  articles  of  association; 

2.  With  the  consent  of  all  the  members; 

3.  On  his  death; 

4.  On  his  bankruptcy; 


38  COMMERCIAL  CODE  OF  JAPAN. 

5.  On  his  incompetency  being  declared  by  the 
court ; 

6.  On  his  expulsion. 

Nos.  1-4  are  causes  for  a  dissolution  of  the  association 
under  the  German  Commercial  Code,  except  that  in  case  of 
death  or  bankruptcy  the  association  may  continue  if  it 
has  been  so  agreed  between  the  members.  See  Arts.  131, 
138,  139,  of  the  same  code.  Nos.  5  and  6  are  not  found  in 
Art.  131  of  the  German  Code,  though  expulsion  is  recognized 
by  Art.  140. 

Article  70.  A  member  can  be  expelled  only  in 
the  following  cases  and  then  only  with  the  unanimous 
consent  of  the  other  members.  The  expulsion  can- 
not be  set  up  as  a  defense  against  the  expelled  mem- 
ber unless  notice  has  been  given  to  him, — 

1.  When  a  member  is  unable  to  contribute  or 
does  not  contribute  within  a  reasonable  time  after 
a  call  has  been  made; 

2.  When  a  member  acts  in  violation  of  the  pro- 
visions of  Art.  60,  par.  1 ; 

3.  When  a  member  has  committed  an  improper 
act  towards  the  association,  during  his  management 
of  its  business  or  his  representation  of  it; 

4.  When  a  member  has  interfered  with  the  man- 
agement of  the  business  in  case  he  has  no  right  to 
do  so; 

5.  When  a  member  in  any  other  respect  fails  to 
perform  important  duties. 

For  instance,  certain  duties  of  the  member  may  be 
stipulated  in  the  articles  of  association,  the  violation  of  which 
will  justify  an  expulsion. 


BUSINESS  ASSOCIATIONS.  39 

In  Germany  the  expulsion  of  a  member  can  be  effected  only 
by  the  Court.  See  Arts.  133  and  140  of  the  German  Commer- 
cial Code. 


Article  71.  A  retired  member  is  entitled  to  repay- 
ment of  his  interest  in  the  company,  even  if  the 
contribution  of  such  member  is  no  more  than  service 
or  good  will.  But  this  provision  is  not  applicable 
where  the  articles  of  association  have  provided  to 
the  contrary. 

For  instance,  a  man  who  has  a  good  credit  in  the  business 
world  allows  his  name  or  trade  name  to  be  inserted  in  the 
trade  name  of  the  association ;  this  is  a  contribution  of  good 
will  within  the  meaning  of  this  article. 

Article  72.  If  the  surname  or  full  name  of  a 
retired  member  is  still  used  in  the  trade  name  of  the 
association,  he  may  demand  the  discontinuance  of 
such  use. 

Article  73.  A  retired  member  is  responsible  for  a 
debt  of  the  association  incurred  before  the  registra- 
tion of  his  retirement  at  the  place  of  the  principal 
office.  Such  responsibility  terminates  when  two  years 
have  elapsed  after  the  registration. 

The  preceding  provisions  are  applicable  to  new 
members  to  whom  the  interest  in  the  association  has 
been  transferred  with  the  consent  of  all  the  other 
members. 

See  notes  to  Art.  103,  infra. 


40  COMMERCIAL  CODE  OF  JAPAN. 

Sub- Section  5. — Dissolution. 

Article  74.     The  association  is  dissolved, — 

1 .  At  the  expiration  of  the  time  for  which  the 
association  is  formed,  or  on  the  happening  of  any 
cause  specified  in  the  articles  of  association; 

2.  When  the  enterprise  of  the  association  is 
accomplished,  or  its  accomplishment  becomes  impos- 
sible ; 

3.  With  the  consent  of  all  the  members; 

4.  By  a  consolidation  with  or  absorption  by  other 
associations ; 

5.  When  there  remains  only  one  member  in  the 
association ; 

6.  By  the  bankruptcy  of  the  association; 

7.  By  a  decree  of  the  court. 

Art.  131  of  the  German  Commercial  Code  makes  no 
provision  for  the  dissolution  of  the  association  on  the  happen- 
ing of  the  events  designated  in  Nos.  2,  4  and  5  of  the  article. 
On  the  otheF  hand,  the  bankruptcy  or  death  of  a  member 
is  in  the  German  Code  a  cause  of  dissolution,  and  also  a 
notice  of  retirement  given  by  a  member  is  a  cause  of  disso- 
lution. 

Article  75.  In  cases  falling  under  Art.  74,  No.  1, 
the  association  may  be  continued  with  the  consent 
of  the  whole  or  part  of  the  members.  The  dissent- 
ing members  are  to  be  treated  as  if  they  had  retired. 

Article  76.  When  an  association  is  dissolved, 
except  in  the  case  of  consolidation  or  absorption1 
or  bankruptcy,  such  dissolution  shall  be  registered 


BUSINESS  ASSOCIATIONS.  41 

within  two  weeks  at  the  place  of  the  principal  office 
and  the  place  of  any  branch  establishment.2 

1  In  Japanese,  there  is  a  word  pronounced  "Gohei,"  which 
signifies  either  the  consolidation  of  two  associations  or  the 
absorption  of  one  association  by  the  other. 

2  Art.  143  of  the  German  Commercial  Code  provides  that 
when  the  dissolution  of  the  association  has  not  taken  place 
owing  to  bankruptcy,  the  dissolution  must  be  inscribed  by 
all  the  members  in  the  trade  register.  A  similar  provision 
exists  in  case  a  member  retires  from  the  association. 

Article  77.  The  consolidation  or  absorption  of 
associations  may  take  place  by  a  unanimous  agree- 
ment of  the  members. 

This  provision  is  derived  from  the  Italian  Commercial 
Code,  but  under  that  Code  consolidation  is  not  considered 
as  dissolution.  The  German  Commercial  Code  makes  no 
provision  for  the  consolidation  of  a  societe  en  nom  collectif 
and  a  societe  en  commandite. 

Article  78.  When  a  resolution  of  consolidation 
or  absorption  is  passed,  the  association  shall  make 
an  inventory  and  a  balance  sheet  within  two  weeks. 

The  association  must  publicly  announce  to  its 
creditors  within  this  period  that  they  may  present 
their  objections  within  a  certain  time,  and  if  the 
creditors  are  known  to  the  association,  they  must 
be  separately  notified.  But  the  time  within  which 
they  may  present  their  objections  shall  not  be  less 
than  two  months. 

Article  79.  If  creditors  make  no  objections  against 
the  consolidation  or  absorption  within  the  time  men- 


42  COMMERCIAL  CODE  OF  JAPAN. 

tioned  in  Art.  78,  par.  2,  they  are  considered  to  have 
consented  to  it. 

If  creditors  make  objections,  the  consolidation  or 
absorption  cannot  take  place  unless  the  debts  are 
paid  or  adequate  security  is  furnished. 

A  consolidation  or  absorption  in  violation  of  the 
preceding  provision  cannot  be  set  up  as  a  defense 
against  the  creditors  who  have  presented  their  objec- 
tions. 

Article  80.  If  a  consolidation  or  absorption  has 
taken  place  without  making  the  public  announce- 
ment mentioned  in  Art.  78,  par.  2,  it  cannot  be  set 
up  as  a  defense  against  the  creditors  of  the  company. 

If  a  consolidation  or  absorption  has  taken  place 
without  making  separate  notifications  to  the  creditors 
who  are  known  to  the  association,  it  cannot  be  set 
up  as  a  defense  against  such  creditors. 

Article  81.  When  a  consolidation  or  absorption 
has  taken  place  there  shall  be  made  at  the  place  of 
the  principal  office  and  the  place  of  any  branch 
establishment  within  two  weeks  a  registration  of 
alteration,  in  the  case  of  an  absorption,  on  the  part 
of  the  association  which  continues  to  exist  after  the 
absorption,  and,  in  the  case  of  consolidation  or 
absorption,  a  registration  of  dissolution  on  the  part 
of  the  association  or  associations  which  cease  to  exist 
through  the  consolidation  or  absorption,  and  in  the 
case  of  consolidation,  a  registration  of  the  particulars 
mentioned  in  Art.  51,  par.  1,  on  the  part  of  the 
association  which  is  created  by  the  consolidation. 


BUSINESS  ASSOCIATIONS.  43 

Article  82.  The  association  which  continues  to 
exist  after  an  absorption,  or  which  is  created  by  a 
consolidation,  succeeds  to  the  rights  and  duties  of 
the  association  or  associations  which  cease  to  exist 
through  the  consolidation  or  absorption. 

Article  83.  In  case  of  unavoidable  necessity,  any 
member  may  apply  to  the  court  for  a  dissolution  of 
the  association.  But,  in  such  case,  the  court,  on  the 
application  of  a  member,  may  expel  a  member  or 
members  instead  of  dissolving  the  association. 

Similar  to  Art.  133,  par.  1,  and  Art.  140,  par.  1,  of 
the  German  Commercial  Code. 

Sub- Section  6  — Li  quidation. 

Article  84.  For  any  purpose  connected  with  liqui- 
dation, an  association  is  deemed  to  continue  in 
existence  after  its  dissolution. 

Thus,  during  the  time  of  liquidation,  the  dissolved 
association  can  sue  or  be  sued  in  the  name  of  the  association. 

Article  85.  The  method  of  disposition  of  the 
property  of  a  dissolved  association  may  be  con- 
cluded by  the  unanimous  agreement  of  the  members. 
In  such  case  an  inventory  and  balance  sheet  shall 
be  made  within  two  weeks  after  the  dissolution. 

The  provisions  of  Arts.  78  (par.  2),  79  and  80,  are 
applicable  to  the  case  mentioned  above. 

Art.  158  of  the  German  Commercial  Code  provides  that 
if  the  members  agree  upon  another  kind  of  partition  instead 
of   liquidation,    the   enactments    concerning   liquidation   are 


44  COMMERCIAL  CODE  OF  JAPAN. 

applicable  to  the  rights  of  a  third  person,  so  long  as  there  are 
any  assets  still  undivided. 

Article  86.  If  the  method  of  disposition  of  the 
property  has  not  been  concluded  according  to  the 
provisions  of  Art.  85,  liquidation  shall  take  place 
according  to  the  provisions  of  the  following  thirteen 
Articles,  except  in  cases  of  consolidation  and  bank- 
ruptcy. 

Derived  from  Art.  145,  par.  1,  of  the  German  Commercial 
Code. 

Article  87.  When  a  liquidation  takes  place,  all 
the  members  are  to  be  liquidators  or  the  majority  of 
the  members  may  appoint  the  liquidators. 

Derived  from  Art.  146,  par.  1,  of  the  German  Commercial 
Code. 

Article  88.  In  cases  arising  under  Art.  74,  No.  5, 
the  court  will  appoint  liquidators  on  the  application 
of  any  person  interested. 

Art.  146,  par.  2,  of  the  German  Commercial  Code  reads 
as  follows: — 

"At  the  request  of  one  of  the  interested  parties,  the  nomi- 
nation of  the  liquidators  may  be  made  by  the  Court  in 
whose  jurisdiction  the  partnership  has  its  place  of  business, 
when  there  is  serious  ground  for  so  doing ;  in  such  a  case  the 
Court  may  nominate  persons  as  liquidators  who  do  not 
belong  to  the  partnership.     (Societe  en  nom  collectif.)" 

Article  89.  When  an  association  has  been  dis- 
solved by  a  decree  of  the  court,  the  same  court  will 
appoint  liquidators  on  the  application  of  any  person 
interested  or  of  the  attorney-general. 


BUSINESS  ASSOCIATIONS.  45 

Article  90.  When  liquidators  have  been  appointed 
they  shall  register  their  names  and  residences  at  the 
place  of  the  principal  office  and  the  place  of  any 
branch  establishment  within  two  weeks. 

Similar  to  Art.  148,  par.  1,  of  the  German  Commercial 
Code. 

Article  91.  The  duties  of  liquidators  are  as  fol- 
lows : — 

1.  To  wind  up  the  pending  business. 

2.  To  collect  and  pay  debts. 

3.  To  distribute  the  remaining  property. 
Liquidators  have  authority  to  do  all  acts  in  court 

or  outside  of  court  necessary  for  the  performance  of 
these  duties.  Any  restriction  on  the  authority  of 
the  liquidators  cannot  be  set  up  as  a  defence  against 
third  parties  acting  in  good  faith.1 

The  provision  of  Art.  81  of  the  Civil  Code  is  appli- 
cable to  the  liquidation  of  a  societe  en  nom  collectif.2 

1  This  article  is  derived  from  Arts.  149,  151,  and  155,  par.  1, 
of  the  German  Commercial  Code. 

2  Art.  81  of  the  Civil  Code  reads  as  follows: — 

"When  the  liquidators,  during  the  liquidation  of  a  juridical 
person,  have  found  that  its  property  is  not  sufficient  to  pay 
its  debts,  they  shall  instantly  apply  to  the  Court  for  a  declara- 
tion of  bankruptcy  and  make  a  public  notice  thereof. 

"The  office  of  the  liquidators  terminates  as  soon  as  they 
assign  the  business  to  the  trustee  in  bankruptcy. 

"In  such  case  any  debt  paid  or  delivery  made  by  the 
liquidators  can  be  taken  back  by  the  trustee  in  bankruptcy." 

Article  92.  If  the  existing  property  of  an  asso- 
ciation is  not  sufficient  to  meet  the  debts,  the  liqui- 
dators may  require  the  members  to  make  contribu- 


46  COMMERCIAL  CODE  OF  JAPAN. 

tions,  even  though  such  contributions  are  not  due 
at  the  time  of  liquidation. 

Article  93.  If  there  exist  several  liquidators,  all 
acts  in  regard  to  the  liquidation  are  concluded  by  the 
majority.  But  as  to  third  parties,  each  liquidator 
may  represent  the  association. 

Art.  150  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"When  there  are  several  liquidators,  they  can  only  under- 
take matters  concerning  the  liquidation  acting  together 
unless  it  has  been  agreed  that  they  can  act  alone  and  sepa- 
rately; such  an  agreement  must  be  inscribed  in  the  trade 
register." 

"The  enactments  of  par.  1  do  not  take  away  from  the 
liquidators  the  right  of  authorizing  certain  among  them  to  do 
certain  acts  or  a  certain  class  of  acts." 

Article  94.  As  soon  as  the  liquidators  assume 
their  offices,  they  shall  examine  the  assets  of  the 
association,  make  an  inventory  and  balance  sheet, 
and  deliver  them  to  the  members. 

The  liquidators,  on  the  application  of  the  mem- 
bers, must  make  a  monthly  report  to  them  in  regard 
to  the  progress  of  the  liquidation. 

According  to  Art.  154  of  the  German  Commercial  Code, 
the  liquidators  must  make  a  balance  sheet  at  the  beginning 
and  end  of  the  liquidation. 

Article  95.  The  liquidators  cannot  distribute  the 
assets  of  the  association  to  its  members  before  all 
the  debts  have  been  paid. 

Art.  155  of  the  German  Commercial  Code  provides  that 
the  assets  that  are  over  after  payment  of  debts  must  be 


BUSINESS  ASSOCIATIONS.  47 

divided  by  the  liquidators  between  the  members,  in  propor- 
tion to  their  shares  in  the  capital  of  the  association. 

Article  96.  The  liquidators  who  have  been  ap- 
pointed by  the  members  may  be  dismissed  at  any 
time.  The  majority  of  the  members  must  concur 
in  such  dismissal. 

In  case  of  necessity,  the  court  may  dismiss  the 
liquidators  on  the  application  of  any  person  inter- 
ested. 

This  article  corresponds  to  Art.  147  of  the  German 
Commercial  Code,  which,  however,  requires  "the  unanimous 
resolution  of  interested  parties." 

Article  97.  The  dismissal  or  change  of  liquidators 
shall  be  registered  at  the  place  of  the  principal  office 
and  the  place  of  any  branch  establishment. 

Corresponds  to  Art.  148,  par.  1,  of  the  German  Commercial 
Code. 

Article  98.  As  soon  as  liquidation  is  finished,  the 
liquidators  shall  render  an  account  and  submit  it 
to  the  members  for  their  approval. 

If  the  members  make  no  objection  to  the  account 
within  a  month,  they  are  considered  to  have  approved 
it,  except  where  the  liquidators  have  acted  dis- 
honestly. 

Article  99.  As  soon  as  liquidation  is  finished,  the 
liquidators  shall  make  a  registration  thereof  at  the 
place  of  the  principal  office  and  the  place  of  any 
branch  establishment. 

Identical  with  Art.  157,  par.  1,  of  the  German  Commercial 
Code. 


48  COMMERCIAL  CODE  OF  JAPAN. 

Article  100.  If  the  formation  of  an  association 
has  been  rescinded  after  the  commencement  of  its 
business,1  liquidation  shall  take  place  as  in  the  case 
of  dissolution.  In  such  case,  the  court  will  appoint 
liquidators  on  the  application  of  any  person  inter- 
ested.2 

1  For  instance,  the  contract  of  tne  formation  of  an  associa- 
tion may  be  rescinded  on  the  ground  of  fraud  or  duress, 
or  a  party  to  the  contract  may  be  an  infant  who  has  entered 
into  it  without  the  consent  of  his  guardian.  In  such  cases, 
all  acts  done  in  the  name  of  the  association  after  its  formation 
and  before  its  rescission  are  deemed  to  be  valid  under  this 
article. 

2  In  the  German  Commercial  Code  there  is  a  similar  pro- 
vision for  a  societe  anonyme,  but  not  for  a  societe  en  nom 
collectif  or  a  societe  en  commandite.  According  to  the  Com- 
mercial Codes  of  Portugal  and  Belgium,  the  general  rule  for  all 
business  associations  is  that  a  liquidation  takes  place  in  case 
the  formation  of  the  association  is  void. 

Article  101.  The  books  of  the  association,  its 
business  correspondence,  and  all  documents  con- 
nected with  the  liquidation  shall  be  preserved  for 
ten  years  after  the  dissolution  has  been  registered 
at  the  place  of  its  principal  office  in  the  case  of 
Art.  88,  or,  in  any  other  case,  after  the  completion 
of  the  liquidation  has  been  registered.  The  custodian 
of  these  books  and  documents  is  appointed  by  the 
majority  of  the  members. 

Art.  157,  par.  2,  of  the  German  Commercial  Code  reads  as 
follows : — 

"The  books  and  paper  of  the  dissolved  partnership  {societe 
en  nom  collectif)  are  given  into  the  safe  keeping  of  one  of  the 


BUSINESS  ASSOCIATIONS.  49 

partners  or  of  a  third  party.  In  default  of  an  arrangement 
being  come  to,  such  partner  or  third  party  will  be  chosen 
by  the  Court  in  whose  jurisdiction  the  partnership  has  its 
seat  of  business." 

Article  102.  On  the  death  of  a  member  leaving 
several  heirs,1  one  representative  shall  be  appointed 
in  order  to  exercise  the  rights  of  the  member  in 
regard  to  the  liquidation.2 

1  See  note  to  Art.  428,  infra. 

1  Derived  from  Art.  146  of  the  German  Commercial  Code. 

Article  103.  The  liability  of  the  members  men- 
tioned in  Art.  63  is  terminated  when  five  years  have 
elapsed  after  the  dissolution  of  the  association  was 
registered  at  the  place  of  its  principal  office. 

Even  after  the  expiration  of  the  said  period,  the 
creditors  of  the  association  may  demand  the  pay- 
ment of  the  debts  out  of  the  remaining  property 
which  has  not  been  distributed. 

The  period  of  time  spoken  of,  as  well  as  that  mentioned  in 
Art.  73,  supra,  is  not  prescription  within  the  meaning  of  the 
Civil  Code;  and  therefore  the  rules  of  the  Civil  Code  con- 
cerning suspension  of  prescription,  etc.,  i.e.  suspending  the 
operation  of  the  Statute  of  Limitations  for  civil  obligations, 
are  not  applicable.  However,  the  German  Commercial  Code 
deems  this  period  of  time  as  prescription.  Art.  159  of  that 
Code  provides  that  claims  against  a  member  for  contracts 
entered  into  by  the  company  are  not  maintainable  after 
five  years  from  the  dissolution  of  the  company  or  retire- 
ment of  the  member,  so  long  as  the  claim  is  not  subject  to 
a  shorter  prescription;  and  that  prescription  begins  with  the 
end  of  the  day  on  which  the  dissolution  of  the  company, 
or  retirement  of  the  member,  is  entered  in  the  trade  register 
of  the  district  in  which  the  company  has  its  place  of  business. 


50  COMMERCIAL  CODE  OF  JAPAN. 


SECTION  3.— SOCIETE  EN  COMMANDITE. 

Article  104.  A  societt  en  commandite  is  composed 
of  members  of  unlimited  liability  and  members  of 
limited  liability. 

Art.  161,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"A  company  which  has  for  its  object  the  carrying  on  of  a 
business  under  a  firm  name,  the  responsibility  of  one  or 
several  of  the  members  with  regard  to  the  creditors  of  the 
company  being  limited  to  the  amount  of  their  subscribed 
capital,  whilst  that  of  the  other  members  is  unlimited,  is  a 
commandite  company  {societe  en  commandite) ." 

Article  105.  The  provisions  for  a  societe  en  nom 
collectif  are  applicable  to  a  societe  en  commandite  in 
case  there  are  no  special  provisions  in  this  section. 

Derived  from  Art.  161,  par.  2,  of  the  German  Commercial 
Code. 

Article  106.  In  addition  to  the  particulars  men- 
tioned in  Art.  50,  the  limited  or  unlimited  liability 
of  each  member  of  a  soctiti  en  commandite  shall  be 
set  forth  in  the  articles  of  association. 

Article  107.  In  addition  to  the  particulars  men- 
tioned in  Art.  51,  No.  1,  the  association  shall 
register  the  limited  or  unlimited  liability  of  each 
member  at  the  place  of  its  principal  office  and 
the  place  of  any  branch  establishment  within  two 
weeks  after  the  articles  of  association  have  been 
made. 

Derived  from  Art.  162,  par.  1,  of  the  German  Commercial 
Code. 


BUSINESS  ASSOCIATIONS.  51 

Article  108.  The  contributions  of  the  members  of 
limited  liability  can  only  be  made  with  money  or 
other  property. 

Thus,  service  or  good- will  cannot  be  contributed.  In 
Germany,  as  far  as  the  members  inter  se  are  concerned,  a 
member  of  limited  liability  may  give  a  service  as  his  contri- 
bution towards  the  capital. 

Article  109.  Each  member  of  unlimited  liability 
has  a  right  and  duty  to  manage  the  business  of  the 
association  unless  the  articles  of  association  pro- 
vide to  the  contrary. 

If  there  are  several  members  of  unlimited  lia- 
bility, the  management  of  the  business  is  concluded 
by  majority. 

See  Arts.  56  and  105,  supra,  and  their  notes. 

Article  110.  The  appointment  and  dismissal  of  a 
manager  must  be  concluded  by  the  majority  of  the 
members  of  unlimited  liability,  even  if  there  are 
special  members  appointed  for  the  management  of 
the  business  of  the  association. 

See  Arts.  57  and  105,  supra,  and  their  notes. 

Article  111.  The  members  of  limited  liability, 
at  the  end  of  a  business  year,  within  business  hours, 
may  demand  an  inspection  of  the  inventory  and 
balance  sheet  of  the  association  and  inquire  into  its 
affairs  and  the  state  of  its  property. 

In  case  of  necessity,  the  court  may,  on  the  appli- 
cation of  the  members   of  limited  liability,   allow 


52  COMMERCIAL  CODE  OF  JAPAN. 

them  to  inquire  into  the  affairs  of  the  association  and 
the  state  of  its  property. 

This  article  is  derived  from  Art.  166  of  the  German  Com- 
mercial Code. 

Article  112.  A  member  of  limited  liability  cannot 
transfer  the  whole  or  part  of  his  interest  in  the  asso- 
ciation without  the  consent  of  all  the  members  of 
unlimited  liability. 

The  interests  of  the  members  of  unlimited  liability  can 
be  transferred  only  with  the  unanimous  consent  of  both  the 
members  of  unlimited  liability  and  those  of  limited  liability. 
See  Arts.  59  and  105,  supra,  and  their  notes. 

Article  113.  A  member  of  limited  liability  may 
carry  on  commercial  transactions  within  the  scope 
of  the  business  of  the  association  or  become  a  mem- 
ber of  unlimited  liability  of  any  other  company  of 
the  same  business,  either  on  his  own  account  or  on 
account  of  third  persons. 

Derived  from  Art.  165  of  the  German  Commercial  Code. 

Article  114.  If  there  are  no  members  of  unlimited 
liability  appointed  by  the  articles  of  association 
or  by  an  agreement  of  all  the  members  to  represent 
the  association,  each  member  of  unlimited  liability 
represents  the  association. 

See  Arts.  61  and  105,  supra,  and  their  notes. 

Article  115.  A  member  of  limited  liability  has 
no  right  to  manage  the  business  of  the  association 
or  to  represent  it. 

Derived  from  Arts.  170  and  164  of  the  German  Commercial 
Code. 


BUSINESS  ASSOCIATIONS.  53 

Article  116.  If  a  member  of  limited  liability  acts 
in  such  a  manner  as  induces  others  to  believe 
that  he  is  a  member  of  unlimited  liability,  he  is 
responsible  as  a  member  of  unlimited  liability  to 
third  parties  acting  in  good  faith. 

This  is  derived  from  the  old  German  Commercial  Code, 
Art.  169,  which  provided  that  a  member  of  limited  liability 
should  be  unlimitedly  liable  if  his  name  appeared  in  the  trade 
name. 

Article  117.  On  the  death  of  a  member  of  limited 
liability,  his  heir  takes  his  place  as  a  member. 

A  declaration  of  incompetency  against  a  member 
of  limited  liability  is  not  a  cause  for  his  retire- 
ment. 

Art.  177  of  the  German  Commercial  Code  provides  that 
the  death  of  a  member  of  limited  liability  does  not  necessi- 
tate the  dissolution  of  the  association. 

Article  118.  A  soctite  en  commandite  is  dissolved 
when  all  the  members  of  unlimited  liability  or  all 
those  of  limited  liability  have  retired;  but  in  the 
latter  case,  on  a  unanimous  resolution  of  the  remain- 
ing members  of  unlimited  liability,  the  company 
may  be  continued  as  a  soctite  en  nom  collectif. 

In  case  the  company  is  changed  into  a  societe*  en 
nom  collectif  as  mentioned  above,  the  dissolution  of 
the  societe  en  commandite  shall  be  registered  within 
two  weeks  at  the  place  of  the  principal  office  and  the 
place  of  any  branch  establishment;  and  as  to  the 
societe  en  nom  collectif,  a  registration  shall  be  made  in 
accordance  with  the  provision  of  Art.  51,  No.  1. 


54  COMMERCIAL  CODE  OF  JAPAN. 


/ 


SECTION  4.— SOCIETE  ANONYME. 

Sub-Section  1. — Formation. 

Article  119.  There  must  be  at  least  seven  pro- 
moters for  the  formation  of  a  soctitt  anonyme. 

In  Germany  only  five  promoters  are  required.  This 
article  is  of  English  or  French  origin. 

Article  120.  The  promoters  must  draw  up  and 
sign  the  Articles  of  Association,  in  which  the  follow- 
ing particulars  must  be  set  forth:1 — 

1 .  The  object  of  the  association. 

2.  The  trade  name. 

3.  The  total  amount  of  the  capital. 

4.  The  amount  of  each  share. 

5.  The  number  of  shares  which  a  director  must 
own.2 

6.  The  place  of  the  principal  office  and  the  place 
of  any  branch  establishment. 

7.  The  manner  in  which  the  association  has  given 
its  public  notice.3 

8.  The  names  and  residences  of  the  promoters. 

1  All  these  requirements,  except  Nos.  5  and  8,  are  found 
in  Art.  182  of  the  German  Commercial  Code,  but  according 
to  the  latter,  the  mode  of  nominating  and  composing  the 
directorate  and  the  manner  in  which  a  general  meeting  of 
shareholders  is  summoned  must  be  fixed  in  the  articles  of 
association. 

2  A  director  must  be  a  shareholder  in  Germany,  but  in 
France,  even  a  stranger  may  become  a  director.  Under  the 
present  article,  a  Japanese  director  must  at  least  hold  one 
share.    See  Arts.  164  and  168,  infra. 


BUSINESS  ASSOCIATIONS.  55 

3  For  instance,  the  association  may  fix  a  certain  newspaper 
in  which  any  notice  of  the  association  is  to  be  given.  By 
doing  so,  the  holders  of  certificates  to  bearer  as  well  third 
persons  dealing  with  the  association  may  refer  to  such  paper 
for  all  information  concerning  the  business  of  the  association. 

Article  121.  The  particulars  mentioned  in  Art.  1 20, 
Nos.  5-7,  if  not  set  forth  in  the  articles  of  associa- 
tion, may  be  inserted  afterwards  by  the  preliminary 
meeting  of  shareholders  or  by  the  general  meeting 
of  shareholders. 

The  resolution  of  such  general  meeting  shall  take 
place  in  accordance  with  the  provisions  of  Art.  209. 

As  these  particulars  are  comparatively  unimportant,  their 
omission  is  not  a  ground  for  avoiding  the  articles  of  asso- 
ciation. They  may,  therefore,  be  supplied  later  at  the  meet- 
ings. The  preliminary  meeting  is  called  by  the  promoters 
after  the  first  payment  has  been  made  upon  each  share. 
See  Art.  131,  infra. 

Article  122.  Promises  touching  the  following 
matters  shall  have  no  effect  unless  they  have  been 
set  forth  in  the  articles  of  association: — 

1.  The  term  for  the  existence  of  the  association 
and  the  causes  for  its  dissolution. 

2.  The  issue  of  shares  above  their  face  value. 

3.  The  special  interests  to  be  received  by  the 
promoters  and  the  names  of  the  promoters  who  are 
to  receive  such  interests. 

4.  The  names  of  the  persons  who  contribute 
property  other  than  money,  the  nature  and  value 
of  such  property,  and  the  number  of  shares  issued 
in  consideration  for  such  contributions. 


56  COMMERCIAL  CODE  OF  JAPAN. 

5.  The  expenses  of  the  formation  of  the  associa- 
tion, for  which  the  association  will  be  liable,  and  the 
amount  of  compensation  to  be  received  by  the  pro- 
moters. 

This  article  is  identical  with  Art.  186  of  the  German 
Commercial  Code,  except  Nos.  1  and  2;  as  to  No.  2, 
however,  Art.  184  of  the  same  Code  provides  that  shares 
may  be  issued  at  a  higher  price  if  the  articles  permit. 

Article  123.  The  association  begins  to  have  its 
existence  when  the  promoters  have  subscribed  the 
whole  amount  of  its  shares.1  In  such  case,  the  first 
payment,  not  less  than  one  fourth  of  the  shares, 
must  be  made  by  the  promoters  without  delay;  2 
and  the  directors  and  auditors  must  be  appointed. 
Such  appointment  is  concluded  by  the  majority  of 
the  promoters.3 

1  The  German  Commercial  Code  recognizes  the  difference 
between  the  simultaneous  formation  and  the  successive 
formation  of  a  societe  anonyme:  in  the  latter,  the  promoters 
ask  for  subscriptions  to  the  shares;  in  the  former,  they 
themselves  are  subscribers  to  all  the  shares.  The  present 
article  deals  with  the  method  of  the  simultaneous  formation 
of  a  societe  anonyme.  But  the  French  Commercial  Code 
provides  only  for  the  successive  formation  and  there  is  no 
special  provision  for  the  simultaneous  formation.  Neither 
did  the  First  Japanese  Commercial  Code  recognize  the  latter. 
See  Art.  188  of  the  German  Commercial  Code. 

2  Both  in  Germany  and  France,  the  first  payment  must 
not  be  less  than  one  fourth  of  the  whole  amount  of  the 
capital. 

3  Art.  190,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 


BUSINESS  ASSOCIATIONS.  57 

"When  the  founders  subscribe  for  all  the  shares,  they 
ought  at  the  time  of  the  foundation  of  the  company,  or  even 
at  a  special  meeting  held  under  the  court  or  before  a  notary, 
to  appoint  a  council  of  supervision  (auditors)." 

The  word  "auditors"  is  explained  under  Art.  180,  infra. 

Article  124.  As  soon  as  the  directors  are  ap- 
pointed, they  must  apply  to  the  court  for  the 
appointment  of  inspectors  for  the  purpose  of  inspect- 
ing the  particulars  mentioned  in  Art.  122,  Nos.  3-5, 
and  whether  the  first  payment  has  been  made  or  not. 

The  court,  on  the  report  of  the  inspectors,  may 
take  action  under  the  provisions  of  Art.  135. 

This  article  is  derived  from  Arts.  192  and  193  of  the  German 
Commercial  Code. 

Article  125.  If  the  promoters  do  not  subscribe  the 
whole  amount  of  the  shares,  they  shall  invite  sub- 
scriptions. 

Similar  to  Art.  189,  par.  1,  of  the  German  Commercial 
Code. 

Article  126.  If  a  person  desires  to  subscribe  for 
shares,  he  must  sign  two  copies  of  the  certificate  of 
subscription  and  designate  therein  the  number  of 
shares  to  be  subscribed.1 

The  certificate  of  subscription  must  be  made  by 
the  promoters  and  must  contain  the  following  par- 
ticulars : — 

1.  The  date  on  which  the  articles  of  association 
were  drawn  up. 

2.  The  particulars  mentioned  in  Arts.  1 20  and  1 22. 


58  COMMERCIAL  CODE  OF  JAPAN. 

3.  The  number  of  shares  subscribed  by  each 
promoter. 

4.  The  amount  of  the  first  payment. 

If  the  subscriber  pays  more  than  the  face  value 
of  the  shares,  he  must  state  on  the  certificate  of 
subscription  the  amount  which  he  pays  for  the 
shares.2 

1  The  reason  why  two  copies  must  be  made  is,  that  one 
copy  is  for  the  association  itself  and  the  other  is  for  the 
court  when  the  formation  of  the  company  is  registered. 
See  Art.  187,  pars.  2  and  3,  of  the  Code  of  Procedure  in  Non- 
actionable  Matters. 

2  This  article  is  derived  from  Art.  189  of  the  German 
Commercial  Code. 

Article  127.  A  subscriber  is  obliged  to  make  pay- 
ment according  to  the  number  of  shares  subscribed. 

Article  128.  Shares  cannot  be  issued  at  a  price 
less  than  their  nominal  value.1 

The  amount  of  the  first  payment  cannot  be  less 
than  one-fourth  of  the  amount  of  the  shares.2 

1  Identical  with  Art.  184,  par.  1,  of  the  German  Commercial 
Code. 

2  See  Art.  123,  supra,  and  notes.  There  is  an  exception  to 
this  rule.  The  first  payment  in  a  railway  company  may  be 
less  than  one  fourth,  but  not  less  than  one  tenth. 

Article  129.  As  soon  as  the  shares  are  subscribed 
the  promoters  must  call  for  the  first  payment. 

If  shares  are  issued  at  a  price  more  than  the 
nominal  value,  the  excess  amount  shall  be  paid 
with  the  first  payment. 


BUSINESS  ASSOCIATIONS.  59 

Article  130.  If  the  subscriber  does  not  make  the 
payment  mentioned  in  Art.  129,  the  promoters  may 
notify  him  that  he  must  pay  within  a  certain  period 
of  time  and  that,  upon  his  default,  he  will  lose  his 
rights.  But  such  period  of  time  shall  not  be  less 
than  two  weeks. 

If  the  subscriber  who  has  been  notified  does  not 
make  the  payment,  he  loses  his  rights.  In  such 
case  the  promoters  may  again  invite  subscriptions 
for  the  shares  subscribed  by  him. 

The  above  provisions  do  not  affect  the  right  to 
claim  damages  from  the  subscriber. 

The  promoters  may  sue  the  subscriber  without  such  notifi- 
cation and  claim  a  specific  performance.  But  as  soon  as 
the  subscriber  loses  his  rights,  the  promoters  can  no  longer 
compel  him  to  pay  for  his  subscription,  though  he  is  still 
liable  for  damages.  "To  lose  rights"  means  that  he  can 
no  longer  enjoy  the  rights  of  a  subscriber,  that  is,  the  right 
to  attend  a  preliminary  meeting  of  shareholders,  or  to  become 
a  shareholder  when  the  association  is  completely  formed. 

Article  131.  As  soon  as  the  payment  mentioned 
in  Art.  129  has  been  made,  a  preliminary  meeting 
of  shareholders  must  be  called  by  the  promoters. 

In  a  preliminary  meeting  of  shareholders,  all  reso- 
lutions shall  be  passed  by  a  majority  of  the  votes  of 
the  subscribers  present,  provided  such  majority  repre- 
sents at  least  one-half  in  number  as  well  as  in  interest 
of  all  the  subscribers. 

The  provisions  of  Arts.  156,  pars.  1  and  2,  161, 
pars.  3  and  4,  162,  and  163,  pars.  1  and  2,  are  appli- 
cable to  the  preliminary  meeting  of  shareholders. 


60  COMMERCIAL  CODE  OF  JAPAN. 

Art.  190,  par.  2,  of  the  German  Commercial  Code  provides 
that  when  the  promoters  do  not  subscribe  for  all  the  shares, 
they  ought,  after  the  capital  has  been  subscribed,  to  call  a 
general  meeting  for  the  purpose  of  electing  auditors. 

Article  132.  The  promoters  shall  make  a  report 
to  the  preliminary  meeting  of  shareholders  on  all 
matters  in  regard  to  the  formation  of  the  association. 

Article  133.  At  the  preliminary  meeting  of  share- 
holders, directors  and  auditors  shall  be  appointed. 

See  note  to  Art.  131. 

Article  134.  Directors  and  auditors  shall  examine 
the  following  particulars  and  make  a  report  to  the 
preliminary  meeting  of  shareholders:1 — 

1 .  Whether  the  whole  number  of  shares  has  been 
subscribed. 

2.  Whether  the  payment  mentioned  in  Art.  129 
has  been  made  on,  each  share. 

3.  Whether  the  matters  mentioned  in  Art.  122, 
Nos.  3-5,  are  reasonable. 

In  case  directors  or  auditors  are  appointed  from 
the  promoters,  the  preliminary  meeting  of  share- 
holders may  appoint  special  inspectors  instead  of  the 
directors  and  auditors  to  make  the  examination  and 
report.2 

1  The  preliminary  meeting  is  usually  continued  for  several 
days,  the  members  meeting  and  then  adjourning  to  meet 
again  to  hear  the  report. 

2  This  article  as  well  as  Art.  124  is  derived  from  Arts. 
192  and  193  of  the  German  Commercial  Code. 


BUSINESS  ASSOCIATIONS.  61 

Article  135.  If  the  preliminary  meeting  of  share- 
holders is  of  opinion  that  the  matters  mentioned  in 
Art.  122,  Nos.  3-5,  are  unreasonable,  they  may  be 
altered.  But  in  case  a  contribution  is  made  in 
property  other  than  money,  and  the  number  of 
shares  to  be  given  in  consideration  is  decreased,  the 
contribution  may  be  made  in  money. 

Article  136.  In  case  some  shares  have  not  been 
subscribed  or  the  payment  mentioned  in  Art.  129 
has  not  been  made,  the  promoters  shall  be  jointly 
liable  for  such  subscription  or  payment.  This  pro- 
vision is  applicable  where  the  subscription  has  been 
rescinded. 

Art.  202,  par.  1,  of  the  German  Commercial  Code  reads 
as  follows : — 

"The  founders  are  jointly  and  severally  responsible  to 
the  company  for  the  accuracy  and  detail  of  the  declarations 
they  make  relating  to  the  subscription  and  the  money  paid 
up  of  the  capital,  as  well  as  those  referring  to  the  statements 
provided  for  by  Art.  186  for  the  registration  of  the  company 
in  the  trade  register,  in  addition  to  the  obligation  which  is 
incumbent  on  them  to  repair  possible  damages  that  might 
be  sustained  hereafter;  they  are  especially  held  responsible 
for  the  amount  of  capital  not  yet  subscribed,  to  get  overdue 
instalments  paid,  and  to  repay  any  amount  which  has  not 
been  taken  into  account  in  the  estimates  of  foundation  ex- 
penses." 

Article  137.  The  right  to  claim  damages  from 
the  promoters  is  not  affected  by  Arts.  135  and  136. 

Art.  202,  pars.  2,  4  and  5,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  founders  are  severally  and  jointly  liable  to  the 
company  for  damages  which  it  may  sustain  on  account  of 


62  COMMERCIAL  CODE  OF  JAPAN. 

wilful  misrepresentation  regarding  the  share  capital,  on 
those  things  taken  into  account  as  designated  in  Art.   186. 

"If  a  company  suffers  a  loss  on  account  of  the  insolvency 
of  a  shareholder,  the  founders  who  knew  of  such  insolvency 
and  allowed  him  to  become  a  shareholder  are  jointly  and 
severally  liable  to  repair  such  a  loss. 

"With  the  founders  the  following  are  responsible  to  the 
company  jointly  and  severally  for  damages: — 

"1.  He  who  takes  a  sum  of  money  not  included  in  the 
estimates  of  the  expenses  of  foundation,  if,  when  he  takes 
such  money,  he  knew,  or  from  the  circumstances  ought  to 
have  known  that  this  sum  was  being  paid  to  him  secretly,  as 
well  as  every  person  who  is  knowingly  an  accomplice  in  such 
secret  payment. 

"2.  In  case  of  damage  caused  by  malicious  intention  in 
anything  connected  with  the  subscription  of  the  capital,  every 
third  person  knowingly  an  accomplice  in  causing  such  damage." 

Article  138.  The  preliminary  meeting  of  share- 
holders may  alter  the  articles  of  association  or 
abandon  the  formation  of  the  association. 

Art.  196  of  the  German  Commercial  Code  reads  in  part 
as   follows: — 

"In  case  the  promoters  have  not  subscribed  for  all  the 
shares,  the  court  calls  a  general  meeting  of  shareholders 
inscribed  on  the  list  to  come  to  a  resolution  concerning  the 
formation  of  the  company. 

"The  majority  which  expresses  itself  in  favor  of  the  forma- 
tion of  the  company  must  include  at  least  one-fourth  of  the 
shareholders  inscribed  on  the  list ;  the  amount  of  their  share 
must  at  least  represent  one-fourth  of  the  whole  capital. 

"When  even  this  majority  is  reached  the  formation  of  the 
company  is  considered  as  refused  when  a  portion  of  the 
shareholders  falls  under  the  conditions  provided  for  by 
Art.  186,  and  when  the  majority  of  votes  given  by  the  other 
shareholders  are  against  the  formation." 


BUSINESS  ASSOCIATIONS.  63 

Article  139.  When  the  promoters  have  not  sub- 
scribed the  whole  amount  of  shares,  the  association 
begins  to  have  its  existence  at  the  end  of  the  pre- 
liminary meeting  of  shareholders. 

Article  140.  If  the  payment  mentioned  in  Art.  129 
is  not  fully  made  within  one  year  after  the  sub- 
scription of  the  whole  amount  of  shares,  or  the  pre- 
liminary meeting  of  shareholders  is  not  called  by 
the  promoters  within  six  months  after  such  pay- 
ment, subscribers  may  rescind  their  subscriptions 
and  demand  that  the  money  paid  be  refunded. 

The  promoters  will  be  jointly  liable  for  the  repayment  of 
the  subscription.     See  Art.  136,  supra. 

Article  141.  A  societi  anonyme  shall  register  the 
following  particulars  at  the  place  of  the  principal 
office  and  the  place  of  any  branch  establishment 
within  two  weeks  from  the  ending  of  the  examina- 
tions mentioned  in  Art.  124  in  case  the  promoters 
have  subscribed  the  whole  amount  of  shares,  or 
from  the  ending  of  the  preliminary  meeting  of  share- 
holders in  case  the  promoters  have  invited  sub- 
scriptions : — 

1.  Those  particulars  mentioned  in  Art.  120,  Nos. 
1-4  and  7. 

2.  The  principal  office  and  any  branch  estab- 
lishment. 

3.  The  date  of  the  formation  of  the  association. 

4.  The  term  of  its  duration  or  causes  for  its  dis- 
solution, if  they  have  been  stipulated. 

5.  The  amount  paid  on  each  share. 


64  COMMERCIAL  CODE  OF  JAPAN. 

6.  The  rate  of  interest,  if  interest  is  to  be  dis- 
tributed before  the  commencement  of  business. 

7.  The  names  and  residences  of  the  directors  and 
auditors. 

The  provisions  of  Arts.  51,  pars.  2  and  3,  52  and 
53  are  applicable  to  a  societe  anonyme. 

According  to  the  majority  of  the  continental  codes,  the 
whole  articles  of  association  must  be  registered  or  filed  in 
the  court;  but  the  German  Code,  from  which  the  present 
article  is  derived,  only  requires  the  important  facts  to  be 
registered.  See  Arts.  195,  198  and  199  of  the  German  Com- 
mercial  Code. 

Article  142.  No  subscriber  shall  be  allowed  to 
rescind  his  subscription  on  the  ground  of  fraud  or 
duress  after  a  company  has  been  registered  at  the 
place  of  its  principal  office  according  to  the  provi- 
sions of  Art.  141,  par.  1. 

This  provision  is  an  exception  to  the  general  rule  of  the 
civil  law  in  regard  to  rescission  of  contract.  But  persons 
incompetent  to  make  a  contract,  as  infants  who  have  not  the 
permission  of  parents  or  guardians,  are  allowed  to  rescind 
this  subscription. 

Sub-Section  2.— Shares. 

Article  143.  The  capital  of  a  societe  anonyme  shall 
be  divided  into  shares. 

Article  144.  The  responsibility  of  a  shareholder 
is  limited  to  the  amount  of  shares  subscribed  by  or 
transferred  to  him.1 

As  to  payment  on  shares,  a  shareholder  cannot 
claim  a  set-off  against  the  association.2 


BUSINESS  ASSOCIATIONS.  65 

1  Identical  with  Art.  211  of  the  German  Commercial  Code. 

2  Payment  on  shares  must  be  made  in  money.  Claims 
against  third  persons,  such  as  bills,  notes  or  bonds,  and 
claims  against  the  association  cannot  be  contributed  as 
payment  on  shares. 

Art.  221  of  the  German  Commercial  Code  provides  that 
shareholders  and  their  predecessors  cannot  be  discharged 
from  making  the  payments  indicated  in  Arts.  211  and  220; 
they  cannot  set  off  debts  due  to  them  by  the  association 
against  such  payments. 

Article  145.  The  amount  of  all  the  shares  shall 
be  equal. * 

The  amount  of  each  share  cannot  be  less  than 
fifty  yen,  but  in  case  the  whole  amount  of  the  shares 
is  to  be  paid  in  at  once,  the  amount  of  each  share 
may  be  reduced  to  twenty  yen.2 

1  This  provision  is  derived  from  the  French  and  Italian 
Codes. 

2  Art.  180  of  the  German  Commercial  Code  provides  as 
follows : — 

"The  capital  of  the  company  must  amount  to  at  least 
1,000  marks. 

"In  the  case  of  an  undertaking  of  public  utility,  the  federal 
council  may,  if  it  be  a  matter  of  special  local  interest,  au- 
thorize an  issue  of  non- transferable  shares  to  a  less  amount, 
but  never  less  than  200  marks.  .   .  ." 

Article  146.  If  one  share  is  owned  by  several 
persons,  the  owners  in  common  shall  appoint  one 
person  in  order  to  exercise  the  rights  of  a  share- 
holder. 

The  owners  in  common  are  jointly  liable  to  the 
association  for  the  payment  of  the  share. 


66  COMMERCIAL  CODE  OF  JAPAN. 

This  article  is  identical  with  Art.  225,  pars.  1  and  2,  of  the 
German  Commercial  Code.  Under  the  German  system  a 
share  is  indivisible  and  the  existence  of  a  partial  shareholder 
is  not  recognized. 

Article  147.  No  certificates  of  shares1  shall  be 
allowed  to  issue  unless  registration  has  been  made 
at  the  place  of  the  principal  office  according  to  the 
provisions  of  Art.  141,  par.  1. 

Certificates  issued  in  violation  of  this  provision 
are  void,  but  the  right  to  claim  damages  from  those 
who  issue  them  is  not  affected.2 

1  A  certificate  may  be  issued  for  one  share  or  for  many 
shares.  The  former  is  called  a  simple  certificate;  the  latter, 
a  compound  certificate.  In  Japan,  it  is  usual  to  have  one 
certificate  for  one  share. 

2  This  article  is  identical  with  Art.  200,  par.  3,  and  Art.  209, 
par.  2,  of  the  German  Commercial  Code. 

Article  148.  A  certificate  shall  contain  the  follow- 
ing particulars,  bearing  a  number  and  signed  by  the 
directors : — 

1 .  The  trade  name  of  the  company. 

2.  The  date  on  which  the  registration  mentioned 
in  Art.  141,  par.  1,  was  made  at  the  place  of  the 
principal  office. 

3.  The  total  amount  of  the  capital. 

4.  The  amount  of  each  share. 

The  amount  of  each  payment  on  the  shares  must 
be  inserted  in  the  certificate  if  the  whole  amount  of 
shares  is  not  to  be  paid  up  all  at  once. 

Article  149.  In  the  absence  of  any  provision  in 
the  articles  of    association    to   the  contrary,  shares 


BUSINESS  ASSOCIATIONS.  67 

can  be  transferred  without  the  consent  of  the  asso- 
ciation; but  no  transfer  or  even  a  promise  to  transfer 
can  be  made  before  a  registration  has  been  made  at 
the  place  of  the  principal  office  according  to  the 
provisions  of  Art.  141,  par.  1. 

The  same  provisions  are  found  in  Art.  222,  par.  2,  and  Art. 
200,  par.  2,  of  the  German  Commercial  Code. 

Article  150.  Unless  the  name  and  residence  of  a 
transferee  have  been  entered  in  the  book  of  share- 
holders, and  his  name  written  on  the  certificate,  no 
transfer  of  a  personal  share  can  be  set  up  as  a  defence 
against  the  company  or  third  persons. 

Shares  are  divided  into  two  kinds,  personal  shares  and 
shares  to  bearer.  In  the  former,  the  name  of  its  holder  is 
inserted,  but  in  the  latter,  there  is  no  specific  name.  A  valid 
transfer  of  a  share  to  bearer  can  be  executed  by  delivery. 

Art.  222,  par.  1,  of  the  German  Commercial  Code  provides 
that  personal  shares  must  be  inscribed  in  the  share  register 
of  the  association  with  the  name,  address  and  profession  of 
the  holder  accurately  written. 

Article  151.  A  societe  anonyme  shall  not  acquire 
or  take  as  security  its  own  shares.1 

Shares  cannot  be  canceled  except  the  provisions 
in  regard  to  the  reduction  of  capital  are  strictly 
followed.  But  this  provision  is  not  applicable  where, 
in  accordance  with  the  articles  of  association,  such 
cancelation  is  made  from  the  profits  which  other- 
wise would  be  distributed  to  the  shareholders.2 

1  There  are  three  principles  of  law  in  regard  to  the  question 
whether  a  societe  anonyme  can  acquire  its  own  shares.  Accord- 
ing to  the   French   Commercial  Code  and  the  old   German 


68  COMMERCIAL  CODE  OF  JAPAN. 

Commercial  Code,  such  acquisition  is  neither  limited  nor 
prohibited.  On  the  other  hand,  a  societe  anonyme  is  absolutely 
restrained  from  acquiring  its  own  shares  as  in  Japan  by  the 
German  law  of  1870  and  the  Commercial  Codes  of  Hungary, 
Spain  and  Sweden.  However,  the  present  Commercial  Code 
of  Germany  as  well  as  those  of  Austria,  Italy,  Belgium  and 
Switzerland,  only  make  certain  restrictions  upon  such  acqui- 
sition. For  instance,  Art  226  of  the  German  Code  provides 
that  in  the  usual  course  of  business  a  societe  anonyme  must 
not  acquire  or  take  as  security  its  own  shares  unless  in  execu- 
tion of  a  commission  to  purchase.  In  the  usual  course,  it 
cannot  acquire  or  accept  as  security  its  certificates  even  to 
execute  an  order  to  purchase.  It  is  the  same  with  its  own 
shares  if  they  have  not  been  fully  paid  up,  or,  when  they 
have  been  issued  at  a  price  above  their  nominal  value,  if  this 
price  has  not  been  fully  paid  up. 

2  Art.  227  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"The  regaining  possession  of  (paying  off  of)  shares  is  only 
authorized  if  provided  for  by  the  articles  of  association. 
Provision  for  so  doing  ought  to  be  made  in  the  original 
articles  or  in  articles  modifying  the  original  ones,  drawn  up 
before  subscription  to  the  shares,  unless  such  regaining 
possession  is  to  be  effected,  not  by  drawing  lots,  giving  notice, 
or  by  similar  means,  but  by  purchasing  shares  outright. 

"No  repurchasing  may  be  effected  except  by  means  of 
profit  available  at  the  annual  taking  of  account,  in  so  far 
as  it  is  not  done  in  the  way  prescribed  for  the  reduction  of 
capital." 

Article  152.  A  call  on  shares  must  be  made  to 
each  shareholder  two  weeks  before  the  call  is  due. 

If  a  shareholder  fails  to  pay  on  the  day  appointed, 
the  association  may  notify  him  that  he  must  pay 
within  a  certain  period  of  time,  and  that  upon  his 
default,   he  will    lose    the  rights  of  a  shareholder. 


BUSINESS  ASSOCIATIONS..  69 

But  such  period  of  time  shall  not  be  less  than  two 
weeks. 

In  such  a  case,  the  association  may  instantly  sue  the 
delinquent  shareholder  without  giving  the  second  notification. 
The  purpose  of  allowing  the  association  to  give  the  second 
notification  is  to  avoid  the  inconvenience  of  bringing  an 
action.  As  soon  as  an  action  has  been  brought,  the  association 
can  no  longer  avail  itself  of  this  convenient  method. 

"To  lose  the  rights  of  a  shareholder"  means  that  the  share 
will  be  forfeited  by  the  association.  When  a  share  is  forfeited, 
the  association  will  acquire  it  as  long  as  it  has  not  been  re- 
acquired by  the  original  transferor  or  resold  to  a  third  person. 

Art.  219  of  the  German  Commercial  Code  reads  as  follows : — 

"If  a  call  is  not  paid  punctually,  shareholders  may  be 
given  time  to  pay  such  call  with  the  notice  that  after  the 
expiration  of  such  time,  they  will  be  deprived  of  their  right 
to  participate  in  profits  as  well  as  their  right  to  the  money 
they  have  already  paid. 

"Notice  must  be  given  three  times  in  the  papers  mentioned 
in  Art.  182,  par.  3.  The  first  publication  should  take  place  at 
least  three  months,  the  last  at  least  one  month,  before  ex- 
piration of  the  time  given  for  payment.  When  the  right  to 
participate  in  profits  cannot  be  transferred  without  the  consent 
of  the  company,  it  is  sufficient,  instead  of  public  advertise- 
ment, to  address  a  single  notice  to  each  shareholder  whose 
money  is  overdue.  This  notice  ought  to  grant  an  extension  of 
time  of  not  less  than  one  month  from  the  day  of  receiving 
such  notice. 

"If  a  shareholder  does  not  pay  his  call  in  spite  of  such 
notice,  he  must  be  declared  deprived  of  his  rights  to  profits, 
as  well  as  to  his  instalments  already  paid.  Such  declaration 
must  be  made  by  advertisement  in  the  company's  papers." 

Article  153.  When  a  shareholder  does  not  pay  a 
call  after  the  association  has  taken  all  necessary 
steps  mentioned  in  Art.  152,  he  loses  his  rights. 


70  COMMERCIAL  CODE  OF  JAPAN. 

In  such  case,  the  association  must  make  a  call 
to  each  transferor  of  the  share  and  require  him  to 
pay  within  a  certain  period  of  time  not  less  than 
two  weeks.  The  transferor  who  first  makes  pay- 
ment on  such  call  acquires  the  share.1 

When  no  transferor  makes  payment,  the  associa- 
tion shall  sell  the  share  at  auction.  If  the  sale 
results  in  a  deficit,  the  company  is  entitled  to  look 
to  the  former  shareholder.  If  such  shareholder 
does  not  pay  within  two  weeks,  the  association  may 
look  to  any  transferor  for  such  payment.2 

The  provisions  of  this  article  do  not  affect  the 
right  of  the  association  to  claim  damages  and  any 
penalty  stipulated  in  the  articles  of  association.3 

1  Here  the  original  transferor  of  the  share  is  treated  as 
warranting  that  the  transferee  will  pay  the  call.  According 
to  the  French  law  of  1867  and  the  Codes  of  Spain  and  Switzer- 
land, the  liability  of  a  transferor  of  shares  as  a  warrantor 
is  extinguished  when  one-half  of  the  amount  of  the  shares 
has  been  paid  up.  The  first  Japanese  Commercial  Code  also 
adopted  this  principle.  But  in  France,  this  law  was  abolished 
in  1893,  and  now  most  jurisdictions  under  the  continental 
system  make  a  transferor  of  shares  responsible  as  long  as 
they  have  not  been  fully  paid  up.  For  instance,  Art.  220 
of  the  German  Commercial  Code  reads  as  follows : — 

"To  the  extent  that  a  shareholder  omits  to  pay  his  call 
on  shares,  the  last  holder,  and  each  one  previously  registered 
as  such  in  the  register  of  shares  is  responsible  to  the  company ; 
every  registered  holder  of  shares  is  only  responsible  for  the 
amount  his  successor  omits  to  pay. 

"Such  responsibility  arises  when  payment  has  not  been 
made  by  the  latter  before  expiration  of  one  month  of  his 
receiving  notice,  and  advice  that  such  notice  has  been  given, 
has  been  forwarded  to  his  legal  predecessor." 


BUSINESS  ASSOCIATIONS.  71 

"The  new  certificate  is  sent  to  the  former  holder  on  pay- 
ment of  the  money  owing.   ..." 

2  The  German  Commercial  Code  also  provides  that  the 
former  shareholder  remains  responsible  to  the  association 
for  the  loss  that  it  may  sustain,  not  only  on  account  of  the 
non-payment  of  this  one  call  but  for  all  subsequent  calls. 

3  Identical  with  Art.  218,  par.  3,  of  the  German  Commercial 
Code. 

Article  154.  A  transferor  of  shares  is  exempted 
from  any  liability  mentioned  in  Art.  153  after  two 
years  have  elapsed  since  the  transfer  has  been  entered 
in  the  book  of  shareholders. 

Identical  with  Art.  220,  par.  4,  of  the  German  Commercial 
Code. 

Article  155.  A  certificate  may  be  made  out  to 
bearer  on  the  demand  of  its  holder,  provided  that 
the  amount  of  the  share  has  been  fully  paid. 

A  share  to  bearer  may  be  again  changed  into  a 
personal  share  at  any  time  on  the  demand  of  the 
shareholder. 

This  article  is  derived  from  Art.  179,  pars.  2  and  3,  Art. 
183,  par.  2,  of  the  German  Commercial  Code. 

Sub-Section  3. — The  Organization  of  the  Association. 

A. — The  General  Meeting  of  Shareholders. 

Article  156.  When  a  general  meeting  of  share- 
holders is  called,  a  notification  shall  be  given  to 
each  shareholder  two  weeks  before  the  date  appointed 
for  this  meeting. 

The  notification  shall  state  the  purpose  of  the 
meeting  and  the  matters  which  are  to  be  discussed. 


72  COMMERCIAL  CODE  OF  JAPAN. 

In  case  the  association  has  issued  shares  to  bearer, 
public  notice  of  the  call  for  the  general  meeting  of 
shareholders  and  the  particulars  mentioned  in  the 
last  paragraph  shall  be  given  three  weeks  before  the 
date  appointed  for  the  meeting. 

Provisions  similar  to  this  article  will  be  found  in  Arts. 
255  and  256  of  the  German  Commercial  Code. 

Article  157.  A  regular  meeting  of  shareholders 
shall  be  called  once  a  year  at  a  definite  time  by  the 
directors  of  the  association. 

If  a  societi  anonyme  distributes  profits  more  than 
once  a  year,  a  general  meeting  shall  be  called  when 
each  distribution  takes  place. 

Art.  253,  par.  1,  of  the  German  Commercial  Code  provides 
that  a  general  meeting  of  shareholders  is  convened  by  the 
directorate  in  so  far  as  the  law  and  the  articles  of  association 
do  not  give  this  right  equally  to  other  persons. 

Article  158.  The  regular  meeting  is  to  inspect 
the  documents  submitted  by  the  directors  and  the 
report  of  the  auditors  and  pass  resolutions  concern- 
ing the  distribution  of  profits  or  interest.1 

The  general  meeting  may  appoint  special  inspectors 
for  the  purpose  of  inspecting  the  books  submitted 
by  the  directors.2 

1  Corresponds  to  Art.  260,  par.  1,  of  the  German  Com- 
mercial Code. 

2  Corresponds  to  Art.  266,  par.  1,  of  the  German  Com- 
mercial Code. 

Article  159.  A  special  meeting  of  shareholders  is 
called  by  the  directors  in  case  of  necessity. 

Corresponds  to  Art.  253,  par.  2,  of  the  German  Commercial 
Code. 


BUSINESS  ASSOCIATIONS.  ^7£- 

Article  160.  The  shareholders  representing  not 
less  than  one-tenth  of  the  capital  may  request  the 
directors  to  call  a  special  meeting  by  filing  an  applica- 
tion in  writing  with  the  directors,  stating  the  purpose 
of  such  meeting  and  the  reason  for  calling  it. 

If  the  directors  do  not  call  the  meeting  within  two 
weeks  after  such  application,  these  shareholders  may 
call  the  meeting  with  the  permission  of  the  court. 

Identical  with  Art.  254,  pars.  1  and  4,  of  the  German  Com- 
mercial Code  except  that  in  the  latter  such  shareholders 
need  not  represent  one-tenth  of  the  capital,  but  only  represent 
one-twentieth  of  the  capital. 

Article  161.  A  resolution  at  a  general  meeting  is 
passed  by  the  majority  of  the  votes  of  the  share- 
holders present,1  unless  this  Code  or  the  articles  of 
association  provide  to  the  contrary. 

Holders  of  certificates  to  bearer  cannot  vote  unless 
their  certificates  have  been  deposited  with  the  asso- 
ciation a  week  before  the  date  appointed  for  the 
meeting. 

A  shareholder  may  vote  by  proxy;  but  the  holder 
of  such  a  proxy  must  produce  a  written  instrument 
to  the  association  in  order  to  prove  his  authority.2 

Those  who  have  special  interests  in  the  resolution 
of  the  general  meeting  cannot  vote.3 

1  Thus,  a  resolution  is  not  passed  by  the  majority  of  the 
shareholders,  but  by  the  majority  of  their  votes.  One  share- 
holder may  have  hundreds  of  votes,  if  not  limited  according 
to  Art.  162,  infra.  This  provision  is  identical  with  Art.  251, 
par.  1,  of  the  German  Commercial  Code. 

2  Identical  with  Art.  252,  pars.  3  and  4,  of  the  German  Com- 
mercial Code. 


74  COMMERCIAL  CODE  OF  JAPAN. 

3  Thus,  the  directors  have  no  right  to  vote  when  a  resolution 
is  presented  concerning  the  approval  or  disapproval  of  the 
account  submitted  by  them.  Art.  252,  par.  5,  of  the  German 
Commercial  Code  provides  that  whoever  may,  as  a  result  of 
a  resolution  to  be  passed,  be  discharged  or  freed  from  an 
obligation  cannot  take  part  personally  in  voting,  nor  exercise 
the  right  of  voting  on  some  one  else's  account.  But  in  Japan, 
a  director  may  vote  a  proxy  for  other  shareholders,  even  if 
he  is  interested  in  such  a  resolution. 

Article  162.  Each  shareholder  has  one  vote  for 
one  share;  but  the  number  of  the  votes  of  a  share- 
holder who  owns  more  than  ten  shares  may  be 
limited  by  the  articles  of  association. 

Derived  from  Art.  252,  par.  1  and  2,  of  the  German  Com- 
mercial Code. 

Article  163.  If  a  general  meeting  is  called  or  a 
resolution  passed  in  violation  of  the  law  or  ordinances 
or  the  articles  of  association,  any  shareholder  may 
apply  to  the  court  for  a  decree  annulling  such 
resolution. 

This  application  shall  be  made  within  a  month 
after  the  resolution.1 

If  the  application  is  made  by  a  shareholder  other 
than  a  director  or  an  auditor  he  must  deposit  his 
certificates,  and  on  the  application  of  the  association 
he  is  required  to  furnish  an  adequate  security.2 

1  The  first  two  paragraphs  of  this  article  are  derived  from 
Art.  271,  pars.  1  and  2,  of  the  German  Commercial  Code. 
But  in  Germany  the  shareholder  who  brings  such  suit  must 
have  disagreed  with  the  resolution  passed. 


BUSINESS  ASSOCIATIONS.  75" 

2  Art.  272,  par.  4,  of  the  German  Commercial  Code  provides 
that  the  court  may  order,  if  asked,  that  the  shareholder 
bringing  the  action  shall  furnish  security  to  the  association 
by  reason  of  possible  damage  resulting  to  it. 

B. — Directors. 

Article  164.  Directors  are  appointed  from  the 
shareholders1  by  the  general  meeting  of  shareholders.2 

1  The  principle  that  the  directors  must  be  shareholders  is 
derived  from  the  French  system  of  law.  The  Codes  of  Switzer- 
land and  Portugal  adopt  the  same  principle.  In  Italy  and 
Belgium,  the  directors  must  deposit  a  certain  amount  of 
shares  with  the  company,  though  it  is  quite  immaterial 
whether  the  shares  belong  to  the  director  depositing  them 
or  to  other  persons.  According  to  this  article  and  Art.  168 
infra,  the  Japanese  adopt  the  French  as  well  as  the  Italian 
and  Belgian  principle.  There  is  no  similar  provision  in  the 
German  Commercial  Code. 

2  In  Germany,  the  directors  are  usually  appointed  by  the 
auditors,  but  the  law  does  not  provide  by  what  organ  the 
directors  shall  be  appointed.  It  is  a  French  theory  that  the 
directors  are  appointed  by  the  general  meeting  of  shareholders. 

Article  165.  The  board  of  directors  shall  consist 
of  three  or  more  persons. 

This  is  derived  from  Belgium.  In  Germany  and  most 
jurisdictions  in  Europe  even  a  single  director  is  sufficient. 
See  Art.  231,  par.  2,  of  the  German  Commercial  Code. 

Article  166.  The  term  of  office  of  a  director  shall 
not  be  longer  than  three  years;  but  he  may  be  re- 
appointed at  the  expiration  of  such  term. 

The  same  provision  is  found  in  the  Codes  of  Portugal 
and  Argentine;  but  in  these  countries  a  director  cannot  be 


76  COMMERCIAL  CODE  OF  JAPAN. 

re-appointed  after  the  expiration  of  the  term.  According 
to  the  German  Commercial  Code  there  is  no  restriction  upon 
the  term  of  office  of  a  director,  though  in  some  other  countries 
such  term  is  limited  to  four,  five  or  six  years. 

Article  167.  A  director  may  be  dismissed  at  any 
time  by  the  general  meeting  of  shareholders,  but  in 
case  the  term  of  office  has  been  fixed  and  he  is  dis- 
missed before  the  expiration  of  such  term  without 
reasonable  cause,  he  may  claim  damages  arising 
from  such  dismissal. 

Art.  231,  par.  3,  of  the  German  Commercial  Code  provides 
that  the  appointment  of  a  member  of  the  directorate  can 
always  be  revoked  without  prejudice  to  the  right  to  the 
compensation  agreed  upon. 

Article  168.  The  directors  shall  deposit  with  the 
auditors  the  number  of  certificates  the  articles  of 
association  direct. 

See  notes  to  Art.  164,  supra. 

Article  169.  Unless  the  articles  of  association 
provide  to  the  contrary,  the  management  of  the 
business  of  the  company  is  concluded  by  the  majority 
of  the  directors.  The  appointment  and  dismissal 
of  a  manager  is  subject  to  the  same  rule. 

Art.  232,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"For  formal  notices,  especially  having  reference  to  the 
signature  of  the  directorate,  the  co-operation  of  all  the 
members  of  the  directorate  is  necessary,  in  default  of  contrary 
provision  in  the  articles  of  association.  The  directorate 
can  nevertheless  authorize  certain  of  its  members  to  conclude 


BUSINESS  ASSOCIATIONS.  77 

specified  business  transactions  or  certain  kinds  of  transac- 
tions. ..." 

Article  170.  Each  director  represents  the  asso- 
ciation.1 

The  provisions  of  Art.  62  are  applicable  to 
directors.2 

1  Art.  232,  par.  2,  of  the  German  Commercial  Code  reads 
as  follows: — 

"When  each  member  of  the  directorate  is  not  authorized 
by  the  articles  to  individually  represent  the  company,  it  may 
be  stipulated  in  the  articles  that  members  of  the  directorate 
may  represent  the  company  with  the  co-operation  of  an 
authorized  representative,  when  several  of  them  cannot  act 
together.  The  council  of  supervision  (auditors)  can  also  be 
authorized  by  the  articles  to  give  certain  members  of  the 
directorate  power  to  represent  the  company  alone  or  with  a 
representative." 

2  Corresponds  to  the  provisions  of  Art.  231,  par.  1,  and 
Art.  235,  par.  2,  of  the  German  Commercial  Code. 

Article  171.  The  directors  shall  keep  at  the 
principal  office  as  well  as  any  branch  establishment 
[copies  of]  the  articles  of  association,  and  the  minute 
book  of  the  general  meeting  of  shareholders,  and  at 
the  principal  office  the  book  of  shareholders  and  the 
book  of  bonds. 

Shareholders  and  the  creditors  of  the  association 
may  at  any  time  during  business  hours  demand  the 
inspection  of  these  documents  or  books. 

Art.  239  of  the  German  Commercial  Code  provides  that  the 
directorate  must  see  that  all  necessary  books  are  kept.  The 
keeping  of  the  book  of  bonds  is  derived  from  the  English 
system  of  law. 


78  COMMERCIAL  CODE  OF  JAPAN. 

Article  172.  The  following  particulars  shall  be 
entered  in  the  book  of  shareholders: — 

1 .  The  names  and  residences  of  the  shareholders. 

2.  The  number  of  shares  owned  by  each  share- 
holder and  the  serial  numbers  of  the  certificates. 

3.  The  amount  already  paid  on  each  share  and 
the  date  on  which  such  payment  was  made. 

4.  The  date  on  which  a  share  was  acquired. 

5.  If  certificates  to  bearer  have  been  issued, 
their  total  number,  serial  numbers,  and  the  dates  on 
which  they  were  issued. 

Article  173.  The  following  particulars  shall  be 
entered  in  the  book  of  bonds : — 

1 .  The  names  and  residences  of  the  bond-holders. 

2.  The  serial  number  of  each  bond. 

3.  The  total  amount  of  the  bonds. 

4.  The  amount  of  each  bond. 

5.  The  rate  of  interest  of  the  bonds. 

6.  In  what  manner  and  at  what  time  the  bonds 
are  to  be  repaid. 

7.  The  date  on  which  a  bond  was  issued. 

8.  The  date  on  which  a  bond  was  acquired. 

9.  If  bonds  to  bearer  have  been  issued,  their 
total  number,  serial  numbers,  and  the  dates  on  which 
they  were  issued. 

Article  174.  As  soon  as  one  half  of  the  capital 
of  a  society  anonyme  has  been  lost,  the  directors 
must  call  a  general  meeting  of  shareholders  and 
make  a  report  of  the  conditions  to  such  meeting.1 

If  a  soctitf  anonyme  is  in  such  a  condition  that  its 


BUSINESS  ASSOCIATIONS.  79 

property  is  insufficient  to  pay  its  debts,  the  directors 
must  directly  apply  to  the  court  for  a  declaration  of 
bankruptcy.2 

1  Derived  from  Art.  240,  par.  1,  of  the  German  Commercial 
Code. 

2  Art.  240,  par.  2,  of  the  German  Code  reads  as  follows: — 
"When  the  company  is  insolvent,  the  directorate  ought  to 

petition  to  wind  up;  it  is  pronounced  bankrupt  when  it  is 
shown  by  the  annual  balance  sheet  or  by  one  taken  at  any 
time,  that  the  profits  (assets)  do  not  exceed  the  liabilities." 

Article  175.  A  director  without  the  consent  of 
the  general  meeting  of  shareholders  cannot  carry 
on  commercial  transactions  within  the  scope  of  the 
business  of  the  association  or  become  a  member  of 
unlimited  liability  of  any  other  business  association 
doing  the  same  business  either  on  his  own  account 
or  on  account  of  third  persons. 

If  a  director  carries  on  commercial  transactions 
in  violation  of  such  provisions,  the  general  meeting 
of  shareholders  may  consider  such  transactions  as 
done  for  the  association. 

If  the  general  meeting  fails  to  exercise  this  right 
within  two  months  after  any  one  of  the  auditors  has 
been  informed  of  such  transactions  or  one  year  has 
elapsed  after  the  transactions,  it  can  no  longer 
enforce  such  right  against  the  director. 

This  article  is  identical  with  Art.  236  of  the  German  Com- 
mercial Code. 

Article  176.  A  director  cannot  transact  business 
with  the  association  either  on  his  own  account  or  on 


80  COMMERCIAL  CODE  OF  JAPAN. 

account  of  third  persons  without  the  permission  of 
the  auditors. 

The  French  and  Italian  Codes  provide  that  the  stock- 
holders must  authorize  the  transaction  and  that  an  account 
of  it  must  be  rendered  annually.  There  is  no  such  restric- 
tion upon  the  directors  under  the  German  Commercial  Code. 
On  the  contrary,  such  transactions  are  absolutely  prohibited 
in  Portugal  and  Argentine. 

Article  177.  If  a  director  acts  in  violation  of  the 
law  or  ordinances,  or  the  articles  of  association, 
he  is  liable  for  damages  to  third  persons  even  if  he 
acts  in  accordance  with  a  resolution  of  the  general 
meeting  of  shareholders. 

This  provision  is  not  applicable  to  a  director  who 
has  presented  his  objection  [to  the  resolution]  in  the 
general  meeting  of  shareholders  and  has  given  notice 
thereof  to  the  auditors. 

In  Germany  as  a  general  rule  the  directors  are  not  directly 
liable  to  the  third  persons,  though  they  are  jointly  and 
severally  liable  to  the  company  for  damages  resulting  from 
their  acts  contrary  to  their  obligations.  See  Art.  241,  of  the 
German  Commercial  Code.  On  the  contrary,  in  Portugal 
and  Argentine  the  directors  are  absolutely  liable  to  third 
persons  for  their  breach  of  duty. 

The  principle  that  the  directors  are  only  liable  to  third 
persons  in  case  the  law  or  the  articles  of  association  are  vio- 
lated, as  under  this  article,  is  derived  from  the  French  as  well 
as  the  English  system  of  law. 

Article  178.  If  the  general  meeting  of  share- 
holders resolves  to  bring  an  action  against  the 
directors,  or  the  shareholders  representing  not  less 
than  one  tenth  of  the  capital  apply  to  the  auditors 


BUSINESS  ASSOCIATIONS.  81 

for  such  an  action  in  case  the  general  meeting  dis- 
approves of  it,  the  association  shall  bring  the  action 
within  one  month  after  the  day  of  the  resolution  or 
application.1 

The  shareholders  who  make  such  application  shall 
deposit  their  certificates  and  upon  the  demand  of 
the  auditors  shall  furnish  an  adequate  security.2 

When  the  action  fails,  these  shareholders  are 
liable  for  damages  to  the  association  only.3 

1  According  to  Arts.  268  and  269  of  the  German  Commer- 
cial Code,  claims  of  the  association  concerning  the  direction 
of  its  affairs  against  members  of  the  directorate  and  the 
auditors  must  be  enforced  when  a  general  meeting  of  share- 
holders has  decided  on  it  by  a  simple  majority,  or  when  a 
minority  representing  one  tenth  of  the  capital  has  demanded 
it,  and  in  the  latter  case,  proceedings  must  be  begun  within 
three  months  after  the  general  meeting. 

2  Art.  269,  pars.  2  and  3,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  minority,  during  the  course  of  the  proceedings,  must 
deposit  shares  amounting  to  one  tenth  of  the  capital,  and  the 
shareholders  composing  such  minority  must  show  authenti- 
cally that  the  shares  have  been  in  their  possession  for  six 
months  previously  to  the  general  meeting." 

"The  defendant  may  demand,  on  account  of  the  loss  he 
may  be  put  to,  that  the  minority  should  furnish  a  guarantee, 
the  extent  to  be  left  entirely  to  the  discretion  of  the 
Court.  .   .   ." 

3  Thus  the  plaintiff  is  not  liable  for  damages  to  the  directors. 
Art.  269,  par.  4  and  5,  of  the  German  Commercial  Code  pro- 
vides that  the  minority  is  obliged  to  find  the  costs  so  far  as 
the  association  is  concerned;  and  if  the  shareholders  have 
acted  in  bad  faith,  they  are  jointly  and  severally  liable  to  the 
defendant  for  any  damage  he  may  sustain  on  account  of  an 
unfounded  charge. 


82  COMMERCIAL  CODE  OF  JAPAN. 

Article  179.  The  amount  of  compensation  to  be 
received  by  the  directors  is  fixed  by  the  general 
meeting  of  shareholders,  if  it  has  not  been  fixed  by 
the  articles  of  association. 

C. — Auditors. 

Article  180.  The  term  of  office  of  an  auditor  is 
one  year,  but  he  may  be  re-appointed  at  the 
expiration  of  the  term. 

A  society  anonymc  consists  of  three  organs.  The  board  of 
directors  is  the  organ  of  representation  which  may  be  likened 
to  the  executive  body  of  a  state.  The  general  meeting  of 
shareholders  is  a  will-organ  which  may  be  compared  to  a 
legislative  body.  Though  the  latter  is  the  highest  organ  and 
has  power  to  supervise  the  former,  a  general  meeting  of  share- 
holders is  only  a  temporary  organ  and  is  usually  called  by 
the  directors.  It  is  therefore  regarded  as  necessary  to  have 
a  permanent  organ  to  exercise  the  power  of  supervision  which 
the  general  meeting  of  shareholders  owing  to  its  temporary 
character  cannot  exercise.  For  this  reason,  the  German  Com- 
mercial Code  recognizes  the  existence  of  a  board  of  auditors  and 
the  Japanese  Code  adopts  this  system.  Again,  under  the  present 
Code,  inspectors  may  be  also  appointed  either  by  the  court 
or  by  the  general  meeting  of  shareholders,  but  these  are  only 
temporary  officers  appointed  for  the  purpose  of  inspecting 
certain  particulars  and  their  power  is  far  more  limited  than 
that  of  the  auditors.  In  France  as  well  as  in  England,  only 
such  temporary  inspectors  are  recognized,  there  being  no 
such  permanent  organ  as  the  board  of  auditors.  See  Art.  234 
of  the  German  Commercial  Code. 

Article  181.  The  auditors  may  at  any  time  require 
the  directors  to  make  a  report  of  the  business,  or 
may  examine  the  business  of  the  association  and  the 
condition  of  its  property. 


BUSINESS  ASSOCIATIONS.  83 

Art.  246,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"The  council  of  supervision  (auditors)  must  supervise  the 
carrying  on  of  the  business  of  the  company  in  all  its  branches, 
and  to  this  end  must  inquire  into  the  progress  of  the  com- 
pany's affairs.  It  can  always  demand  a  report  on  this  sub- 
ject from  the  directorate  and  look  into  the  books  and  papers 
of  the  company,  as  well  as  what  money  is  standing  to  its 
name  in  the  bank  and  the  amount  of  valuables  and  goods 
it  possesses.  It  ought  to  examine  the  annual  accounts,  the 
balance  sheets  and  the  proposals  how  to  divide  the  profits, 
and  make  a  report  on  all  these  points  to  the  general  meeting." 

Article  182.  The  auditors  may  call  a  general 
meeting  of  shareholders  when  they  think  necessary.1 
This  general  meeting  may  appoint  special  inspectors 
to  examine  the  business  of  the  association  and  the 
condition  of  its  property.2 

1  Corresponds  to  Art.  246,  par.  2,  of  the  German  Commer- 
cial Code. 

2  Because  the  report  of  the  auditors  may  not  be  trust- 
worthy. 

Article  183.  The  auditors  shall  examine  the  docu- 
ments submitted  to  the  general  meeting  of  share- 
holders by  the  directors  and  express  their  opinion 
to  such  general  meeting, 

A  similar  provision  will  be  found  in  Art.  243,  par.  2,  of  the 
German  Commercial  Code. 

Article  184.  An  auditor  cannot  act  at  the  same 
time  as  a  director  or  manager;  but  when  there  is  a 
vacancy  among  the  directors,  an  auditor  may  be 
appointed  to  act  temporarily  as  a  director  by  an 


84  COMMERCIAL  CODE  OF  JAPAN. 

agreement  of  both  the  directors  and  the  auditors. 
An  auditor  acting  as  director  in  such  a  case  can- 
not discharge  the  duty  of  an  auditor  without  the 
approval  of  the  general  meeting  of  shareholders 
mentioned  in  Art.  192,  par.  1. 

This  article  is  derived  from  Art.  248  of  the  German  Com- 
mercial Code. 

Article  185.  If  the  association  brings  an  action 
against  its  directors  or  vice  versa,  the  auditors  repre- 
sent the  association  for  such  action;  but  the  general 
meeting  of  shareholders  may  appoint  other  persons 
to  represent  it. 

When  the  shareholders  who  represent  not  less 
than  one  tenth  of  the  capital  apply  for  bringing  an 
action  against  the  directors,  a  special  represent ive 
may  be  appointed. 

This  article  is  identical  with  Arts.  247,  par.  1,  268,  par.  2, 
of  the  German  Commercial  Code.  But  in  Germany  when  the 
responsibility  of  the  auditors  is  in  question,  they  have  the 
right  to  proceed  against  the  directors  without  the  authority 
of  the  general  meeting  or  even  against  its  will.  See  Art.  247, 
par.  2,  of  the  same  Code. 

Article  186.  When  the  auditors  neglect  their 
duties,  they  are  liable  for  damages  to  the  company 
and  third  persons. 

Derived  from  Art.  249  of  the  German  Commercial  Code. 

Article  187.  If  the  general  meeting  of  share- 
holders resolves  to  bring  an  action  against  the 
auditors,  or  the  shareholders  representing  not  less 


BUSINESS  ASSOCIATIONS.  85 

than  one  tenth  of  the  capital  apply  to  the  directors  for 
such  action  in  case  the  general  meeting  disapproves 
of  it,  the  association  shall  bring  the  action  within 
one  month  after  the  day  of  the  resolution  or  appli- 
cation. In  such  case,  the  general  meeting  may 
appoint  persons  other  than  the  directors  to  repre- 
sent the  company  and  when  the  shareholders  who 
represent  not  less  than  one  tenth  of  the  capital  apply 
for  bringing  such  action,  a  special  representative  may 
be  appointed. 

The  shareholders  who  make  such  application  shall 
deposit  their  certificates  and  upon  the  demand  of 
the  directors  shall  furnish  an  adequate  security. 

If  the  action  fails,  those  shareholders  are  liable 
for  damages  to  the  association  only. 

See  notes  to  Art.  178,  supra. 

Article  188.  The  office  of  an  auditor  is  termi- 
nated on  a  declaration  of  his  bankruptcy  or  incom- 
petency. 

A  director's  office  also  terminates  on  his  bankruptcy  or 
incompetency,  but  there  is  no  such  provision  for  a  director  in 
the  Commercial  Code,  for  a  director  being  an  agent  falling 
under  Art.  653  of  the  Japanese  Civil  Code,  which  provides 
that  an  attorneyship  terminates  on  the  death,  or  bankruptcy, 
of  either  the  principal  or  the  agent,  or  on  the  declaration  of 
incompetency  of  the  agent,  it  is  a  matter  of  course  that  the 
office  of  a  director  is  vacated  by  his  bankruptcy  or  incompe- 
tency. Thus,  the  special  provisions  of  this  article  may  mean 
that  the  auditors  are  not  agents  within  the  meaning  of  Art.  653 
of  the  Civil  Code,  though  some  writers  maintain  that  such 
a  provision  is  quite  unnecessary,  since  an  auditor  may  be 
held  as  a  quasi  agent  within  the  meaning  of  Art.  656  of  the 
Japanese  Civil  Code. 


86  COMMERCIAL  CODE  OF  JAPAN. 

Article  189.  The  provisions  of  Arts.  164,  167 
and  179  are  applicable  to  the  auditors. 

That  is,  the  auditors  must  be  appointed  from  the  members 
by  the  general  meeting  of  shareholders ;  they  can  be  dismissed 
by  the  general  meeting;  the  compensation  which  they  receive 
is  to  be  fixed  by  the  meeting.  Arts.  243,  pars.  1  and  4,  and 
245,  pars.  2  and  3,  of  the  German  Commercial  Code  are 
identical  with  these  provisions. 

Sub- Section  4.— Accounts  of  the  Association. 

Article  190.  The  directors  shall  submit  the  fol- 
lowing documents  to  the  auditors  a  week  before  the 
day  appointed  for  the  regular  meeting  of  share- 
holders : — 

1 .  Inventory. 

2.  Balance  sheet. 

3.  Report  of  the  business  of  the  association. 

4.  An  account  of  gains  and  losses. 

5.  Proposals  concerning  the  sinking  fund,  and 
the  distribution  of  profits  or  interest. 

Art.  260,  par.  2,  of  the  German  Commercial  Code  reads  as 
follows : — 

''The  directorate  must,  within  the  first  three  months  of  the 
financial  year,  present  a  balance  sheet  of  the  preceding  year 
to  the  council  of  supervision  (auditors)  and  with  such  coun- 
cil's observations  to  the  general  meeting;  also  an  account  of 
profit  and  loss,  with  a  report  showing  the  financial  state  and 
condition  of  the  company." 

Article  191.  The  directors  shall  keep  at  the  prin- 
cipal office  of  the  association  the  documents  men- 
tioned in  Art.  190  and  the  report  of  the  auditors 


BUSINESS  ASSOCIATIONS.  87 

before  the  day  appointed  for  the  regular  meeting  of 
shareholders. 

Shareholders  and  the  creditors  of  the  association 
may  at  any  time  during  business  hours  demand  an 
inspection  of  such  documents. 

Art.  263,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  papers  mentioned  in  Art.  260,  par.  2,  must  be  deposited 
at  the  offices  of  the  company  for  the  convenience  of  share- 
holders and  for  their  inspection,  at  least  two  weeks  before  the 
general  meeting. 

"Every  shareholder  has  the  right  to  demand  delivery,  at 
least  two  weeks  before  the  day  of  the  general  meeting,  of  a 
copy  of  the  balance  sheet,  of  the  account  of  profit  and  loss, 
of  the  observations  of  the  council  of  supervision  (auditors) 
and  of  the  report  on  the  condition  of  the  company." 

Article  192.  The  directors  shall  submit  the  docu- 
ments mentioned  in  Art.  190  to  the  regular  meeting 
of  shareholders  and  ask  for  their  approval. 

The  directors  shall  publish  the  balance  sheet  after 
such  approval  has  been  obtained. 

According  to  Art.  265  of  the  German  Commercial  Code,  the 
balance  sheet  and  the  account  of  profit  and  loss  must  be 
published  by  the  directorate  in  the  papers  of  the  company 
immediately  after  their  approval,  and  such  publication  must 
be  placed  in  the  trade  register. 

Article  193.  When  the  regular  meeting  has  given 
the  approval  mentioned  in  Art.  192,  the  association 
is  considered  to  have  released  the  responsibility  of 
the  directors  and  the  auditors  unless  they  have  acted 
dishonestly. 


88  COMMERCIAL  CODE  OF  JAPAN. 

/.  e.  The  documents  are  thus  affirmed,  in  the  absence  of 
fraud;  if  mistakes  are  discovered  afterwards,  the  directors 
and  auditors  are  not  liable. 

Article  194.  Whenever  profits  are  distributed,  the 
association  shall  set  apart  one  twentieth  of  such 
profits  as  a  sinking  fund  until  it  amounts  to  one 
fourth  of  the  capital. 

When  shares  have  been  issued  above  the  nominal 
value,  the  excess  amount  shall  be  added  to  the  sink- 
ing fund  until  it  amounts  to  one  fourth  of  the  capital. 

This  is  called  the  legal  sinking  fund,  which  is  recognized  by 
the  Codes  of  Germany,  France  and  other  continental  countries. 
But  the  amount  of  this  fund  is  different  in  different  jurisdic- 
tions. In  Germany  and  France,  a  societe  anonyme  must  set 
apart  one  twentieth  of  the  profits  earned  until  the  sinking 
fund  amounts  to  one  tenth  of  the  capital. 

Article  195.  A  soctite  anonyme  cannot  distribute 
profits  unless  losses  have  been  made  good  and  the 
amount  of  sinking  fund  mentioned  in  Art.  194,  par.  1 , 
has  been  set  apart. 

If  profits  have  been  distributed  in  violation  of  this 
provision,  the  creditors  of  the  association  may  de- 
mand that  the  distributed  profits  be  refunded. 

Article  196.  If,  according  to  the  nature  of  the 
business  of  the  association,  its  business  cannot  be 
commenced  within  two  or  more  years  after  the  regis- 
tration mentioned  in  Art.  141,  par.  1,  has  been 
made  at  the  place  of  the  principal  office,  the  associa- 
tion may  provide  in  the  articles  of  association  that 
a  certain  amount  of  interest  shall  be  paid  to  the 


BUSINESS  ASSOCIATIONS.  89 

shareholders  until  the  commencement  of  the  busi- 
ness; but  the  rate  of  this  interest  shall  not  exceed 
the  legal  rate. 

Such  a  provision  of  the  articles  of  association 
must  be  sanctioned  by  the  court. 

This  is  an  exception  to  the  rule  of  Art.  195,  under  which 
no  distribution  can  be  made  unless  losses  have  been  made 
good  and  the  legal  sinking  fund  has  been  set  apart.  The 
interest  spoken  of  is  known  to  the  German  law  as  Bauzinsen 
(construction  interest) ;  that  is,  in  an  association  carrying  on  a 
gigantic  constructive  work,  as  a  railroad  or  canal,  certain  share- 
holders are  allowed  to  receive  interest  before  the  commence- 
ment of  the  business.  This  principle  is  also  recognized  by 
Hungary,  Italy,  Portugal,  Switzerland  and  other  jurisdic- 
tions. 


Article  197.  Profits  or  interest  must  be  dis- 
tributed in  proportion  to  the  amount  paid  on  the 
shares  according  to  the  articles  of  association;  but 
this  provision  is  not  applicable  where  the  association 
has  issued  preferred  shares. 

Thus,  if  a  shareholder  has  paid  more  money  on  his  shares 
than  he  ought  to  have  paid  according  to  the  articles  of  asso- 
ciation, he  is  not  entitled  to  any  distribution  for  the  excess 
payment ;  for  the  distribution  must  be  made  in  proportion  to 
the  amount  paid  on  the  shares  "according  to  the  articles  of 
association,"  not  merely  in  proportion  to  the  amount  paid  on 
the  shares.  Again,  a  shareholder  who  holds  more  shares  but 
has  paid  less  on  them  is  entitled  to  a  less  amount  of  distribu- 
tion than  he  who  holds  less  shares  and  has  paid  more  on 
them;  for  the  distribution  must  be  made  "in  proportion  to  the 
amount  paid  on  the  shares"  and  not  merely  in  proportion  to 
the  number  of  shares. 


90  COMMERCIAL  CODE  OF  JAPAN. 

In  Germany  there  were  three  principles  of  law  on  which 
profits  were  distributed:  first,  a  distribution  was  made  in 
proportion  to  the  amount  paid  on  the  shares;  second,  a  dis- 
tribution was  made  in  proportion  to  the  amount  paid  on  the 
shares  according  to  the  articles  of  association,  and  if  a  share- 
holder had  paid  a  greater  amount  than  the  general  share- 
holders, he  was  entitled  to  a  certain  amount  of  interest  on  the 
excess  payment;  third,  a  distribution  was  made  in  proportion 
to  the  numbers  of  shares.  In  Japan  the  third  principle  is 
also  adopted,  if  there  is  no  special  provision  in  the  articles  of 
association  in  regard  to  the  payment  on  the  shares. 

Art.  214  of  the  present  German  Commercial  Code  reads  as 
follows : — 

"The  amount  of  profit  is  calculated  proportionately  to  the 
amount  of  the  value  of  the  shares. 

"When  the  calls  on  shares  are  not  paid  in  the  same  pro- 
portion, shareholders,  preliminary  to  receiving  the  profits, 
take  four  per  cent  on  the  amount  of  their  payment;  if  the 
profit  of  the  year  is  insufficient  for  that,  distribution  is  made 
at  a  proportionately  reduced  rate.  .  .  . 

"The  articles  of  association  may  provide  for  another 
method  of  division  of  profits." 

Article  198.  The  court  may  appoint  inspectors 
for  the  purpose  of  inspecting  the  business  of  the 
association  and  the  condition  of  its  property  on 
application  by  shareholders  representing  not  less 
than  one  tenth  of  the  capital. 

The  inspectors  shall  report  the  result  of  the  inspec- 
tion to  the  court.  In  such  case  the  court  may  order 
the  auditors  to  call  a  general  meeting  of  shareholders, 
if  necessary. 

This  article  corresponds  to  Arts.  266,  par.  2,  and  267, 
par.  2,  of  the  German  Commercial  Code. 


BUSINESS  ASSOCIATIONS.  91 


Sub- Section  5. — Bonds. 


Article  199.  A  company  cannot  invite  subscrip- 
tion for  bonds  without  a  resolution  passed  according 
to  the  provisions  of  Art.  209. 

There  are  no  special  provisions  for  issuing  bonds  in  the 
German  Commercial  Code.  The  issuing  of  bonds  in  that 
country,  being  an  operation  within  the  scope  of  the  business 
of  the  association,  may  take  place  at  the  discretion  of  the 
directors  if  not  otherwise  provided  in  the  articles  of  association. 
In  Italy,  Belgium  and  Portugal  the  issuing  of  bonds  is  regu- 
lated by  the  Commercial  Codes.  In  Japan  there  was  once 
a  statute  in  regard  to  issuing  bonds,  but  it  was  abolished  in 
1890  and  all  the  regulations  thereof  were  inserted  in  the 
Commercial  Code. 

A  bond,  within  the  meaning  of  this  Code,  is  mere  evidence 
of  debt,  and  not  necessarily  secured  by  a  mortgage.  Thus, 
in  case  of  insolvency,  a  bondholder  would  have  no  better 
right  than  an  ordinary  creditor,  and  a  holder  of  a  bond  issued 
earlier  would  have  no  better  right  than  a  holder  of  a  bond 
issued  later.  Practically,  it  is  no  easy  matter  for  a  societe 
anonyme  to  raise  money  by  issuing  such  bonds.  In  order  to 
make  up  the  deficiency  of  the  Commercial  Code,  two  statutes 
were  passed  afterwards;  that  is,  the  Law  of  Trust  Companies 
Dealing  with  Secured  Bonds,  and  the  Law  of  the  Mortgage 
of  Manufactories.  The  former  is  modelled  on  the  law  of  the 
United  States. 

Article  200.  The  total  amount  of  the  bonds  issued 
shall  not  exceed  the  amount  which  has  been  paid  up 
on  the  shares. 

If  it  appears  in  the  last  balance  sheet  that  the 
existing  property  of  the  association  is  less  than  the 
amount  which  has  been  paid  up  on  the  shares,  the 


92  COMMERCIAL  CODE  OF  JAPAN. 

total  amount  of  the  bonds  cannot  exceed  the  amount 
of  the  property. 

Article  201.  The  amount  of  each  bond  shall  not 
be  less  than  twenty  yen. 

Article  202.  If  it  is  stipulated  that  the  amount 
to  be  repaid  to  the  bondholders  shall  exceed  the 
nominal  value  of  the  bonds,  the  excess  amount  to  be 
repaid  on  each  bond  shall  be  uniform. 

Article  203.  When  a  societe  anonyme  invites  sub- 
scriptions for  bonds,  the  following  particulars  shall 
be  published  by  the  directors : — 

1.  The  particulars  mentioned  in  Art.  173,  3-6. 

2.  The  trade  name  of  the  association. 

3.  If  bonds  have  been  issued  before,  the  total 
amount  which  has  not  been  paid  back. 

4.  The  value  of  the  bonds  issued  and  the  lowest 
market  value. 

5.  The  capital  of  the  association  and  the  total 
amount  of  shares  which  has  been  paid  up. 

6.  The  amount  of  the  existing  property  of  the 
association  according  to  the  last  balance  sheet. 

Derived  from  English  Companies  Act  of  1900,  as  well  as 
the  Codes  of  Switzerland  and  Italy. 

Article  204.  When  all  the  bonds  have  been  sub- 
scribed, the  directors  shall  cause  the  total  amount 
of  the  bonds  to  be  paid  up. 

The  directors  shall  register  at  the  place  of  the 
principal  office  and  the  place  of  the  branch  estab- 


BUSINESS  ASSOCIATIONS.  93 

lishment  the  particulars  mentioned  in  Art.  173, 
3-6,  within  two  weeks  after  the  total  amount  of  the 
bonds  has  been  paid  up  according  to  the  provision 
of  the  preceding  paragraph. 

Article  205.  A  bond  must  bear  a  serial  number 
and  contain  the  particulars  mentioned  in  Art.  203, 
Nos.  1   and  2,  with  the  signature  of  the  directors. 

Article  206.  No  transfer  of  a  personal  bond  can 
be  set  up  as  a  defence  against  the  association  or 
third  persons,  unless  the  name  and  residence  of  the 
transferee  have  been  entered  in  the  book  of  bonds 
and  his  name  written  on  the  bond. 

Bonds,  like  shares,  are  divided  into  personal  bonds  and 
bonds  to  bearer.     See  note  to  Art.  150,  supra. 

Article  207.  The  provisions  of  Art.  155  are  appli- 
cable to  bonds. 

Sub- Section  6.— The  Alteration  of  Articles  of  Association. 

Article  208.  The  articles  of  association  can  be 
altered  only  by  a  resolution  of  the  general  meeting 
of  shareholders. 

Art.  274,  par.  1,  of  the  German  Commercial  Code  provides 
that  alterations  can  only  be  effected  by  a  resolution  of  a 
general  meeting;  but  the  undertaking  of  alterations  which 
only  consist  of  mere  wording  may  be  conferred  on  the  auditors 
by  such  a  resolution.  The  doctrine  that  the  articles  of 
association  can  be  freely  altered  by  the  general  meeting  of 
shareholders  is  adopted  by  Austria,  Italy,  Belgium,  Switzer- 


94  COMMERCIAL  CODE  OF  JAPAN. 

land  and  Sweden.    It  is  quite  contrary  to  the  doctrine  adopted 
by  the  English  system  of  law. 

Article  209.  The  alteration  of  the  articles  of 
association  is  effected  by  a  majority  of  the  votes 
of  the  shareholders  present,  and  the  shareholders 
present  must  represent  at  least  one-half  the  share- 
holders in  number  as  well  as  in  interest.1 

If  such  a  quorum  is  not  present,  the  shareholders 
present  may  pass  a  temporary  resolution2  by  a 
majority  of  their  votes.  Notice  of  such  a  temporary 
resolution  shall  be  given  to  each  shareholder ;  and  in 
case  certificates  to  bearer  have  been  issued,  such 
resolution  shall  be  published;  and  within  a  period 
not  less  than  one  month,  a  second  general  meeting 
of  shareholders  shall  be  called. 

In  the  second  general  meeting  of  shareholders,  the 
approval  or  disapproval  of  the  temporary  resolution 
will  be  made  only  by  a  majority  of  the  votes  of 
the  shareholders  present. 

The  provisions  of  the  preceding  paragraphs  are  not 
applicable  to  the  case  where  the  resolution  contem- 
plates a  change  in  the  nature  of  the  business  of  the 
association. 

1  This  method  of  passing  a  resolution  is  different  from  the 
general  rule  of  Art.  161.  In  such  case,  under  Art.  275  of 
the  German  Commercial  Code,  the  resolution  ought  to  be 
passed  by  a  majority  representing  at  least  three-quarters  of 
the  capital  represented  at  the  time  of  voting.  Thus,  an 
alteration  of  the  articles  of  association  can  be  much  more 
easily  effected  in  Japan  than  in  Germany. 

2  This  method  of  passing  a  resolution  is  derived  from 
France.  There  is  no  such  provision  in  the  German  Commercial 
Code. 


BUSINESS  ASSOCIATIONS.  95 

Article  210.  The  capital  of  an  association  shall 
not  be  increased  before  the  total  amount  of  shares 
has  been  paid  up. 

Derived  from  Art.  278,  par.  1,  of  the  German  Commercial 
Code.  The  same  provision  will  be  found  in  the  Commercial 
Codes  of  Austria,  Hungary,  and  Spain.  But  such  issuing 
of  new  shares  before  the  total  amount  of  shares  has  been 
paid  up  is  not  prohibited  by  the  French  Code. 

Article  211.  A  societi  anonyme  may  issue  pre- 
ferred shares  only  in  case  the  capital  of  the  associa- 
tion is  increased,  provided  the  articles  of  associa- 
tion permit  such  shares  to  be  issued. 

Thus,  a  societe  anonyme  cannot  issue  preferred  shares 
before  the  total  amount  of  the  original  shares  has  been  paid 
up ;  that  is,  preferred  shares  cannot  be  issued  when  the  associa- 
tion is  formed.  There  is  no  such  restriction  in  the  German 
Commercial   Code. 

Article  212.  In  case  a  societe'  anonyme  has  issued 
preferred  shares,  if  any  alteration  of  the  articles  of 
association  may  be  prejudicial  to  the  preferred  share- 
holders, the  resolution  shall  be  passed  not  only  by 
the  general  meeting  of  the  ordinary  shareholders,  but 
also  by  that  of  the  preferred  shareholders. 

The  provisions  in  regard  to  the  general  meeting 
of  shareholders  are  applicable  to  the  meeting  of  the 
preferred  shareholders. 

Derived  from  Art.  278,  par.  3,  of  the  German  Commercial 
Code. 

Article  213.  In  case  a  societe  anonyme  has  in- 
creased its  capital,   as  soon  as  the  payment  men- 


96  COMMERCIAL  CODE  OF  JAPAN. 

tioned  in  Art.  129  has  been  made  on  all  the  new 
shares  the  directors  must  call  a  general  meeting  of 
shareholders,  and  make  a  report  on  the  issue  of  the 
new  shares. 

Article  214.  The  auditors  shall  examine  the  fol- 
lowing particulars  and  make  a  report  thereon  to  the 
general  meeting  of  shareholders : — 

1.  Whether  the  total  amount  of  new  shares  has 
been  subscribed. 

2.  Whether  the  payment  mentioned  in  Art.  129 
has  been  made  on  each  new  share. 

3.  If  property  other  than  money  has  been  con- 
tributed, whether  the  number  of  shares  issued  in 
consideration  of  such  property  is  reasonable. 

The  general  meeting  of  shareholders  may  appoint 
special  inspectors  for  the  purpose  of  making  the 
examination  and  the  report  mentioned  in  the  last 
paragraph. 

Article  215.  If  the  general  meeting  of  share- 
holders finds  that  the  number  of  shares  issued  in  con- 
sideration of  property  other  than  money  is  unrea- 
sonable, the  meeting  may  reduce  the  number.  In 
such  case,  the  preferred  shareholder  may  make  pay- 
ment in  money. 

Art.  279  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"When  an  addition  is  made  to  the  increased  capital  other 
than  in  cash,  or  when,  at  the  time  of  such  addition,  payment 
is  made  corresponding  to  the  interest  taken  by  the  company 
in  such  an  addition,  the  resolution  relating  to  increase  of 
capital  must  specify  what  actual  article  is  brought  in  in  place 


BUSINESS  ASSOCIATIONS.  97 

of  cash,  or  what  thing  is  brought  into  account,  the  person 
from  whom  the  company  acquires  such  thing,  and  the  number 
of  shares  to  be  given  in  return  for  such  article  brought  in  or 
the  indemnity  to  be  granted  for  the  thing  brought  into 
account. 

"Every  agreement  relating  to  the  above  enumerated 
subjects  which  has  not  been  arrived  at  by  a  resolution  of  the 
general  meeting  is  of  no  effect  as  against  the  company." 

Article  216.  In  case  some  shares  have  not  been 
subscribed  or  the  payment  mentioned  in  Art.  129 
has  not  been  made,  the  directors  shall  be  jointly 
liable  for  such  subscription  or  payment.  This  pro- 
vision is  applicable  where  the  subscription  has  been 
rescinded. 

Thus,  when  the  capital  is  increased,  the  directors  are  looked 
upon  as  the  promoters  when  the  association  is  formed.  See 
Art.  136,  supra. 

Article  217.  The  association  shall  register  the 
following  particulars  at  the  place  of  the  principal 
office  and  the  place  of  any  branch  establishment 
within  two  weeks  after  the  conclusion  of  the  general 
meeting  of  shareholders  called  according  to  the  pro- 
vision of  Art.  213:— 

1.  The  total  amount  of  the  increase  in  capital. 

2.  The  date  on  which  the  resolution  to  increase 
the  capital  was  passed. 

3.  The  amount  paid  on  each  new  share. 

4.  If  preferred  shares  have  been  issued,  the  rights 
of  the  preferred  shareholders. 

Before  the  said  registration  has  been  made  at  the 
place  of  the  principal  office,  new  certificates  cannot 


98  COMMERCIAL  CODE  OF  JAPAN. 

be  issued,  and  a  transfer  of  new  shares,  or  even  a 
promise  to  transfer,  cannot  be  made. 

Similar  provisions  to  this  article  will  be  found  in  Arts. 
280,  284,  286,  287,  of  the  German  Commercial  Code. 

Article  218.  When  new  shares  are  issued,  the 
date  on  which  a  registration  was  made  at  the  place 
of  the  principal  office  according  to  Art.  217,  No.  1, 
shall  be  set  forth  in  the  certificates. 

When  preferred  shares  are  issued,  the  rights  of 
their  holders  shall  be  designated  in  the  certificates. 

Article  219.  The  provisions  of  Arts.  127-130,  140, 
142  and  147,  par.  2,  are  applicable  where  new  shares 
are  issued. 

Article  220.  When  a  resolution  to  decrease  the 
capital  is  passed  by  the  general  meeting  of  share- 
holders, the  method  by  which  the  capital  is  to  be 
decreased  shall  be  resolved  at  the  same  time.1 

The  provisions  of  Arts.  78-80  are  applicable  where 
the  capital  is  to  be  decreased.2 

*Art.  288,  par.  3,  of  the  German  Commercial  Code  provides 
that  the  resolution  ought  at  the  same  time  to  define  the  object 
of  such  reduction,  especially  if  such  reduction  is  destined 
for  the  partial  repayment  to  the  shareholders,  and  in  what 
manner  the  measure  is  to  be  carried  out. 

2  Derived  from  Art.  289  of  the  German  Commercial  Code. 

Sub-Section  7.— Dissolution. 

Article  221.     A  societe  anonyme  is  dissolved, — 
1.     In  the  cases  mentioned    in  Art.  74,  Nos.    1, 
2,  4,  6  and  7; 


BUSINESS  ASSOCIATIONS.  09 

2.  By  a  resolution  of  the  general  meeting  of  share- 
holders ; 

3.  When  the  shareholders  become  less  than  seven. 

According  to  Art.  292  of  the  German  Commercial  Code, 
a  company  is  only  dissolved  by  expiration  of  the  term  fixed 
by  the  articles,  by  a  resolution  of  the  general  meeting  and  by 
bankruptcy. 

Article  222.  A  resolution  of  the  general  meeting 
of  shareholders  in  regard  to  the  dissolution  or  con- 
solidation [or  absorption]  of  the  association  shall  be 
passed  in  accordance  with  the  provisions  of  Art.  209. 

In  Germany,  such  a  resolution  should  be  passed  by  a 
majority  of  at  least  three-quarters  of  the  capital  voting. 

Article  223.  When  a  consolidation  or  absorption 
is  to  take  place,  a  public  notice  thereof  may  be  given 
and  the  transfer  of  personal  shares  may  be  suspended 
during  a  period  not  more  than  one  month  before 
the  day  of  the  general  meeting  of  shareholders,  and 
during  this  meeting. 

When  a  resolution  of  consolidation  or  absorption 
has  been  passed  by  the  general  meeting  of  share- 
holders, the  shareholders  cannot  transfer  their  per- 
sonal shares  after  such  resolution  until  a  registration 
is  made  at  the  place  of  the  principal  office  according 
to  the  provisions  of  Art.  81. 

Article  224.  When  a  societe  anonyme  is  dissolved, 
except  in  the  case  of  bankruptcy,  the  directors  must 
without  delay  give  notice  thereof  to  the  shareholders 
and  if  certificates  to  bearer  have  been  issued  a  public 
notice  thereof  must  be  given. 


100  COMMERCIAL  CODE  OF  JAPAN. 

Article    225.     The    provisions    of    Arts.    76   and 
78-82  are  applicable  to  a  societe  anonyme. 


Sub- Section  8.— Liquidation. 

Article  226.  When  a  societe  anonyme  is  dissolved, 
except  in  the  case  of  consolidation  or  absorption 
or  of  bankruptcy,  the  directors  will  become  liqui- 
dators, unless  the  articles  of  association  provide  to 
the  contrary  or  other  persons  are  appointed  by  the 
general  meeting  as  liquidators. 

If  there  are  no  such  liquidators  as  mentioned 
above,  the  court  will  appoint  liquidators  on  the  appli- 
cation of  any  person  interested. 

This  article  corresponds  to  Art.  295  of  the  German  Com- 
mercial Code. 

Article  227.  As  soon  as  the  liquidators  assume 
their  offices  they  must  examine  the  condition  of  the 
property  of  the  association,  make  an  inventory  and 
balance  sheet  and  submit  them  to  the  general  meet- 
ing of  shareholders  for  their  approval. 

In  such  case  the  provisions  of  Arts.  158,  par.  2, 
and  192,  par.  2,  are  applicable. 

This  article  is  derived  from  Art.  299  of  the  German  Com- 
mercial Code. 

Article  228.  A  liquidator  who  has  been  appointed 
by  the  general  meeting  of  shareholders  may  be  dis- 
missed at  any  time  by  the  same  meeting. 

In  case  of  necessity,  the  court  may  dismiss  the 
liquidators   on   the   application   of  the   auditors   or 


BUSINESS  ASSOCiAfieXNS/     Jj'  '         "  Jf01r 

shareholders  representing  not  less  than  one  tenth  of 
the  capital. 

This  article  is  derived  from  Art.  296  of  the  German  Com- 
mercial Code. 

Article  229.  The  remaining  property  shall  be  dis- 
tributed to  the  shareholders  in  proportion  to  the 
amount  paid  on  the  shares  according  to  the  articles 
of  association;  but  this  provision  is  not  applicable 
where  the  company  has  issued  preferred  shares,  for 
which  there  have  been  special  provisions. 

Art  300,  par.  2,  of  the  German  Commercial  Code  provides 
that  the  partition  is  made  in  proportion  to  the  amount  of  the 
shares,  unless  there  are  several  classes  of  shares  enjoying 
different  rights. 

Article  230.  When  the  liquidation  is  completed, 
the  liquidators  must  without  delay  make  a  report 
and  submit  it  to  the  general  meeting  of  shareholders 
for  their  approval. 

In  such  case  the  provisions  of  Arts.  158,  par.  2, 
and  193  are  applicable. 

Article  231.  If  a  general  meeting  of  shareholders 
is  called  or  a  resolution  passed  in  such  a  manner  as 
to  violate  the  law  or  ordinances,  or  the  articles  of 
association,  the  liquidators  shall  apply  to  the  court 
for  a  decree  annulling  such  resolution. 

Article  232.  If,  after  the  formation  of  a  societe 
anonyme  and  the  commencement  of  its  business,  it  is 
found  out  that  such  formation  is  absolutely  void,1 


102  COMMERCIAL  CODE  OF  JAPAN. 

liquidation  shall  take  place  as  in  the  case  of  disso- 
lution ;  in  such  case  the  court  will  appoint  liquidators 
on  the  application  of  any  person  interested.2 

1  For  instance,  there  may  have  been  less  than  seven  pro- 
moters; some  important  particulars  imposed  by  the  law  may 
have  been  omitted  in  the  articles  of  association;  the  pro- 
moters may  have  failed  to  call  for  the  first  payment  on  the 
shares,  or  failed  to  take  necessary  proceedings,  such  as  the 
report  they  should  make  to  the  preliminary  meeting  of 
shareholders,  or  the  appointment  of  directors  and  auditors 
by  such  meeting,  or  the  examination  which  should  be  made 
by  the  directors  and  auditors.  Unlike  the  Codes  of  France 
and  Portugal,  where  the  cases  in  which  the  formation  of  the 
association  is  void  are  enumerated,  the  Code  of  Japan  allows 
the  extent  of  irregularity  which  shall  render  void  the  organiza- 
tion of  the  association  to  be  determined  by  the  judges. 

2  Art.  311  of  the  German  Commercial  Code  provides  that 
when  the  nullity  of  a  societe  anonyme  is  registered  in  the 
trade  register,  the  enactments  applicable  to  its  dissolution 
must  be  applied  by  analogy  to  the  liquidation  of  its  affairs. 

Article  233.  The  books  of  the  association,  its 
business  correspondence  and  all  documents  connected 
with  the  liquidation  shall  be  preserved  for  ten  years 
after  the  completion  of  the  liquidation  has  been 
registered  at  the  place  of  the  principal  office.  The 
custodian  of  these  books  and  documents  is  appointed 
by  the  court  on  the  application  of  the  liquidators  or 
any  person  interested. 

Derived  from  Art.  302,  par.  2,  of  the  German  Commercial 
Code. 

Article  234.  The  provisions  of  Arts,  84,  89-93, 
95,   97,   99,   159,   160,   163,    176-178,    181,    183-185 


BUSINESS  ASSOCIATIONS.  H)3_ 

and  187  of  this  Code  and  Arts.  79  and  80  of  the  Civil 
Code  are  applicable  to  the  liquidation  of  a  societe 
anonyme. 

The  reference  to  the  Civil  Code  means  that  the  liquidators 
must  give  public  notice  at  least  three  times  during  two 
months  to  the  creditors,  who  must  present  their  demand 
within  a  period  of  not  less  than  two  months ;  and  in  case  they 
present  their  demand  after  that  period,  they  can  only  claim 
against  such  property  as  remains  undistributed  to  the  mem- 
bers after  the  other  debts  have  been  paid.  Similar  provisions 
exist  in  Art.  297  of  the  German  Commercial  Code. 


SECTION  5.— SOCIETE  EN  COMMANDITE  PAR 
ACTIONS. 

Article  235.  A  societe  en  commandite  par  actions 
is  composed  of  members  of  unlimited  liability  and 
shareholders. 

Art.  320,  par.  1,  of  the  German  Commercial  Code  provides 
that  at  least  one  of  the  members  of  a  societe  en  commandite 
par  actions  assumes  unlimited  liability  with  regard  to  creditors 
of  the  association,  while  the  rest  are  interested  only  to  the 
extent  of  their  subscription  to  the  capital  of  the  association. 

Article  236.  The  provisions  for  a  socUU  en  com- 
mandite are  applicable  to  a  societe  en  commandite 
par  actions  so  far  as  the  following  particulars  are 
concerned : — 

1.  The  mutual  relation  between  members  of  un- 
limited liability. 

2.  The  relation  between  members  of  unlimited 
liability  and  shareholders  and  third  persons. 


104  COMMERCIAL  CODE  OF  JAPAN. 

3.  The  retirement  of  members  of  unlimited  lia- 
bility. 

Besides  the  particulars  above  mentioned,  the  pro- 
visions for  a  societe  anonyme  are  applicable  to  a 
societe  en  commandite  par  actions  except  in  case 
there  are  contrary  provisions  in  the  present  chapter. 

This  article,  except  No.  3  of  par.  1,  corresponds  to  Art. 
320,  pars.  2  and  3,  of  the  German  Commercial  Code. 

Article  237.  The  members  of  unlimited  liability 
shall  act  as  promoters,  and  make  and  sign  the  articles 
of  association,  in  which  shall  be  inserted  the  follow- 
ing particulars : — 

1.  Those  mentioned  in  Art.  120,  Nos.  1,  2,  4,  6 
and  7. 

2.  The  total  amount  of  the  shares. 

3.  The  names  and  residences  of  the  members  of 
unlimited  liability. 

4.  The  nature  and  value  or  basis  of  valuation  of 
the  contributions  made  by  the  members  of  unlimited 
liability  other  than  the  amount  paid  for  shares. 

Art.  321  of  the  German  Commercial  Code  reads  as  follows: — 

"The  terms  of  the  articles  ought  to  be  fixed  by  at  least 
five  persons  in  legal  form  or  through  a  notary.  The  members 
personally  responsible  are  all  obliged  to  participate  in  the 
drawing  up  of  the  deed;  besides  these,  only  those  may  become 
parties  to  it  who  have  subscribed  for  shares  as  shareholders. 

"The  amount  of  shares  subscribed  for  by  each  interested 
party  must  be  shown  on  the  deed. 

"Those  who  have  fixed  the  terms  of  the  articles,  or  those 
who  have  brought  in  capital  in  a  shape  other  than  money, 
are  looked  upon  as  the  promoters  of  the  company." 

As  to  the  particulars  which  must  be  contained  in  the 
articles  of  association,  see  Art.  322  of  the  same  Code. 


BUSINESS  ASSOCIATIONS.  405- 

Article  238.  The  members  of  unlimited  liability 
shall  invite  subscriptions  for  the  shares.1 

A  certificate  of  subscription  shall  contain  the  fol- 
lowing particulars:2 — 

1.  Those  mentioned  in  Arts.  122,  126,  par.  2, 
Nos.  1  and  4,  and  237. 

2.  When  the  members  of  unlimited  liability  have 
subscribed  for  shares,  the  number  of  shares  sub- 
scribed by  each  member. 

1  Here  the  members  of  unlimited  liability  act  as  pro- 
moters and  invite  subscription  for  the  shares  in  the  same 
manner  as  in  the  successive  formation  of  a  societe  anonyme. 
But  in  Germany,  even  the  shareholders  of  such  an  associa- 
tion can  be  promoters,  and,  therefore,  a  simultaneous  forma- 
tion of  the  company  is  recognized. 

2  Derived  from  Art.  323  of  the  German  Commercial  Code. 

Article  239.  At  the  preliminary  meeting  of  share- 
holders auditors  shall  be  appointed. 

Members  of  unlimited  liability  cannot  be  appointed 
auditors. 

Because  the  auditors  are  to  represent  the  general  meeting 
of  shareholders  as  distinguished  from  the  members  of  un- 
limited liability. 

Identical  with  Art.  328,  par.  5,  of  the  German  Commercial 
Code. 

Article  240.  Members  of  unlimited  liability  may 
attend  the  preliminary  meeting  of  shareholders  and 
express  their  opinions;  but  they  cannot  vote,  even 
if  they  have  subscribed  for  shares. 

The  shares  subscribed  by  members  of  unlimited 
liability  or  contributions  made  by  them  are  not 
counted  in  regard  to  votes. 


106  COMMERCIAL  CODE  OF  JAPAN. 

The  provisions  of  the  preceding  paragraphs  are 
applicable  to  the  general  meeting  of  shareholders. 

Derived  from  Art.  323,  par.  3,  and  Art.  327,  par.  1,  of  the 
German  Commercial  Code. 

Article  241.  The  auditors  shall  examine  the  par- 
ticulars mentioned  in  Arts.  134,  par.  1,  and  237, 
No.  4,  and  make  a  report  to  the  preliminary  meeting 
of  shareholders. 

Article  242.  The  association  shall  register  at  the 
place  of  its  principal  office  and  the  place  of  any 
branch  establishment  the  following  particulars  within 
two  weeks  after  the  conclusion  of  the  preliminary 
meeting  of  shareholders: — 

1.  Those  mentioned  in  Art.  120,  Nos.  1,  2,  4,  7, 
and  Art.  141,  par.  1,  Nos.  2-6. 

2.  The  total  amount  of  the  shares. 

3.  The  names  and  residences  of  the  members  of 
unlimited  liability.1 

4.  The  nature  of  the  contributions  of  the  mem- 
bers of  unlimited  liability  other  than  the  amount 
paid  on  shares  and  the  value  of  the  property  contri- 
buted by  them. 

5.  The  names  of  the  members  of  unlimited  lia- 
bility who  are  to  represent  the  association,  if  such 
representative  members  have  been  appointed.2 

6.  The  names  and  residences  of  the  auditors. 

1  Derived  from  Art.  323,  par.  5,  first  sentence,  of  the  Ger- 
man Commercial  Code. 

2  Derived  from  Art.  323,  par.  5,  second  sentence,  of  the 
German  Commercial  Code. 


BUSINESS  ASSOCIATIONS.  107" 

Article  243.  The  provisions  for  the  promoters 
of  a  societe  anonyme  are  applicable  to  members  of 
unlimited  liability  who  are  to  represent  the  associa- 
tion, with  the  exception  of  the  provisions  of  Arts. 
164-168,  175  and  179. 

Art.  325  of  the  German  Commercial  Code  reads  as  fol- 
lows:— 

"The  enactments  relating  to  the  directorate  of  a  limited 
liability  company  are  applicable  by  analogy  to  the  members 
personally  responsible  so  far  as  they  concern, — 

"1.  The  notices,  deposits  and  declarations  to  be  made 
in  the  trade  register; 

"2.     The  calling  of  a  general  meeting; 

"3.  The  drawing  up,  presentation  and  publication  of  the 
balance  sheet  and  profit  and  loss  account,  as  well  as  the 
presentation  of  the  report  upon  the  condition  of  the  com- 
pany; 

"4.  Any  action  taken  against  the  resolution  of  a  general 
meeting; 

"5.  The  procedure  for  nominating  examiners  for  verify- 
ing the  balance  sheet,  or  for  the  verification  of  the  facts  con- 
cerning the  foundation  or  carrying  on  of  the  business  of  the 
company,  as  well  as  the  obligations  to  the  examiners  and 
council  of  supervision   (auditors) ; 

"6.  The  summons  to  be  addressed  to  creditors  in  the 
event  of  a  reduction  of  capital; 

"7.  The  claiming  of  any  damages  by  the  company  sus- 
tained in  the  carrying  on  of  its  business; 

"8.     The  opening  of  bankruptcy  proceedings; 

"9.     Penal  responsibility  and  condemnation  to  pay  fines." 

Article  244.  Whenever  in  the  case  of  a  societe  en 
commandite  the  unanimous  agreement  of  the  mem- 
bers is  necessary,  an  agreement  of  the  members  of 
unlimited  liability  is  necessary  as  well  as  a  resolu- 
tion of  the  general  meeting  of  shareholders. 


108  COMMERCIAL  CODE  OF  JAPAN. 

The  provisions  of  Art.  209  are  applicable  to  the 
resolution  mentioned  above. 

Identical  with  Art.  327,  par.  2,  of  the  German  Commercial 
Code. 

Article  245.  The  auditors  are  responsible  for 
making  the  members  of  unlimited  liability  enforce 
the  resolution  of  the  general  meeting  of  shareholders. 

This  is  the  only  point  on  which  an  auditor  of  a  societe 
anonyme  is  different  from  an  auditor  of  a  societe  en  commandite 
par  actions.  But  this  does  not  mean  that  the  auditors  of  a 
societe  en  commandite  par  actions  may  compel  the  members 
of  unlimited  liability  to  carry  into  effect  the  resolutions  of 
the  general  meeting  of  shareholders,  since  the  meeting  is  no 
longer  the  highest  will  organ  of  the  association  as  in  case  of  a 
societe  anonyme.  If  an  agreement  of  the  members  of  un- 
limited liability  is  necessary  to  carrying  out  a  resolution  of 
the  meeting,  the  auditors  must  recommend  it  to  the  members 
of  unlimited  liability.  If  these  members  fail  to  carry  out  a 
resolution  with  which  they  have  agreed,  it  is  the  duty  of  the 
auditors  to  urge  them  to  act  in  accordance  with  the  resolution 
as  well  as  the  agreement,  but  if  the  members  of  unlimited 
liability  have  never  agreed  to  the  resolution  of  the  meeting 
of  shareholders,  the  resolution  fails. 

Corresponds  to  Art.  328,  par.  1,  of  the  German  Commercial 
Code. 

Article  246.  A  societe  en  commandite  par  actions 
is  dissolved  by  the  same  causes  as  a  socie'te  en  nom 
collectif  except  in  the  case  mentioned  in  Art.  83. 

Derived  from  Art.  330  of  the  German  Commercial  Code. 

Article  247.  In  case  all  the  members  of  unlimited 
liability  have  retired,  the  general  meeting  of  share- 


BUSINESS  ASSOCIATIONS.  109- 

holders  may,  by  a  resolution  passed  according  to  the 
provisions  of  Art.  209,  continue  the  company  as  a 
societi  anonyme.  In  such  case,  resolutions  shall  be 
passed  in  regard  to  the  particulars  necessary  for  the 
formation  of  a  societi  anonyme. 

In  such  case  the  provisions  of  Art.  118,  par.  2, 
are  applicable. 

Article  248.  When  a  dissolution  takes  place 
through  any  other  cause  than  consolidation,  absorp- 
tion, bankruptcy,  or  a  decree  of  the  court,  liquida- 
tion is  executed  by  all  the  members  of  unlimited 
liability  or  by  those  appointed  by  such  members 
acting  with  those  appointed  by  the  general  meeting 
of  shareholders,  unless  there  are  special  provisions 
in  the  articles  of  association. 

The  appointment  of  liquidators  by  the  members 
of  unlimited  liability  is  concluded  by  their  majority. 

The  number  of  liquidators  appointed  by  the  gen- 
eral meeting  of  shareholders  shall  be  the  same  as 
that  of  all  the  members  of  unlimited  liability  or 
their  heirs,  or  that  of  the  persons  appointed  by  the 
members  of  unlimited  liability. 

Art.  331,  par.  1,  of  the  German  Commercial  Code  provides 
that  so  long  as  it  is  not  otherwise  provided  by  the  articles, 
liquidation  is  brought  about  by  all  the  members  of  unlimited 
liability  together  with  one  or  several  persons  chosen  by  the 
general  meeting  acting  as  liquidators. 

Article  249.  The  members  of  unlimited  liability 
may  at  any  time  dismiss  the  liquidators  appointed 
by  themselves. 


110  COMMERCIAL  CODE  OF  JAPAN. 

The  provisions  of  Art.  248,  par.  2,  are  applicable 
to  the  dismissal  of  liquidators. 

Art.  331,  par.  2,  of  the  German  Commercial  Code  provides 
that  each  member  of  unlimited  liability  may  also  demand 
that  the  nomination  or  dismissal  of  the  liquidators  be  author- 
ized by  the  court. 

Article  250.  The  provisions  of  Art.  102  are  appli- 
cable to  the  members  of  unlimited  liability  of  a 
societe  en  commandite  par  actions. 

Article  251.  In  regard  to  the  accounts  mentioned 
in  Arts.  227,  par.  1,  and  230,  par.  1,  the  liquidators 
shall  obtain  not  only  the  approval  of  the  general 
meeting  of  shareholders,  but  also  the  approval  of  all 
the  members  of  unlimited  liability. 

Article  252,  A  societe  en  commandite  par  actions 
may  be  changed  into  a  societe  anonyme  in  accord- 
ance with  the  provisions  of  Art.  244. 

Identical  with  Art.  332,  par.  1,  of  the  German  Commercial 
Code. 

Article  253.  When  the  organization  of  the  asso- 
ciation is  altered  according  to  Art.  252,  the  general 
meeting  of  shareholders  shall  pass  resolutions  in 
regard  to  the  particulars  necessary  for  the  formation 
of  a  sociGte'  anonyme.  In  this  general  meeting  even 
the  members  of  unlimited  liability  have  a  right  to 
vote  in  proportion  to  the  number  of  shares  to  be 
subscribed  by  them.1 

In  such  case  the  provisions  of  Arts.  78  and  79, 
pars.  1  and  2  are  applicable.2 


BUSINESS  ASSOCIATIONS.  II F 

1  Art.  332,  pars.  3  and  4,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  interests  of  the  majority  of  shareholders  voting  for 
the  change  ought  to  represent  at  least  one  quarter  of  the 
capital,  not  including  that  portion  formed  by  shares  belonging 
to  members  of  unlimited  liability. 

"The  resolution  ought  to  define  the  rules  necessary  for 
carrying  through  the  change,  as  well  the  method  of  nomi- 
nating and  constituting  the  directorate." 

2  Corresponds  to  Art.  334,  pars.  1  and  2,  of  the  German 
Commercial   Code. 

Article  254.  After  the  creditors  of  the  association 
have  consented  to  the  alteration  of  its  organization 
or  after  the  association  has  performed  the  duties 
imposed  by  Art.  79,  par.  2,  the  dissolution  of  the 
soctitt  en  commandite  par  actions  shall  be  registered 
at  the  place  of  its  principal  office  and  the  place  of 
any  branch  establishment  within  two  weeks;  and 
as  to  the  socUU  anonyme,  a  registration  shall  be 
made  in  accordance  with  the  provisions  of  Art.  141, 
par.  1. 

SECTION  6.— FOREIGN  BUSINESS  ASSOCIATIONS. 

This  section  relates  to  any  business  associations  formed  in 
foreign  countries,  not  merely  to  societes  anonymes  formed  in 
foreign  countries. 

Article  255.  If  a  foreign  business  association1 
establishes  its  branch  office  in  Japan,  it  shall  make 
the  same  registrations  and  public  notifications  as  the 
business  associations  of  the  same  kind  or  the  most 
similar  kind  formed  in  Japan.2 


112  COMMERCIAL  CODE  OF  JAPAN. 

A  foreign  business  association  which  establishes 
its  branch  office  in  Japan  shall  appoint  a  representa- 
tive in  Japan,  and  at  the  time  of  registration  of  the 
branch  office,  shall  register  his  name  and  residence. 

The  provisions  of  Art.  62  are  applicable  to  a 
representative  of  a  foreign  business  association. 

1  There  are  no  special  provisions  by  name  for  foreign 
business  associations  in  the  German  Commercial  Code.  Such 
special  provisions  for  foreign  business  associations  can  only 
be  found  in  the  law  of  1873  of  Belgium  and  the  Codes  of 
Hungary,  Italy,  Portugal  and  Argentine.  The  present  sec- 
tion is  modeled  on  the  law  of  the  latter  countries. 

2  Art.  202  of  the  Code  of  Procedure  in  Non-actionable 
Matters  reads  as  follows: — 

"When  a  foreign  business  association  establishes  its  branch 
office  in  Japan,  an  application  for  registration  must  be  made 
by  the  representative  of  such  business  association  and  he 
must  designate  his  name  and  residence  in  a  written  applica- 
tion and  file  it  with  the  court  together  with  the  following 
documents : — 

1.  Documents  showing  the  existence  of  the  principal 
office  of  the  association. 

2.  Documents  certifying  the  qualification  of  the  repre- 
sentative. 

3.  The  articles  of  association  of  the  association  or  any 
documents  by  which  the  nature  of  the  association  may  be 
ascertained. 

"The  documents  mentioned  above  shall  have  been  acknowl- 
edged before  the  authorities  of  the  native  country  of  such 
business  association  or  before  a  Japanese  consul." 

Article  256.  If  whatever  must  be  registered  ac- 
cording to  Art.  255,  pars.  1  and  2,  occurs  in  a  foreign 
country,  the  period  of  time  for  the  registration  begins 
as  soon  as  the  notice  thereof  is  received. 


BUSINESS  ASSOCIATIONS.  113 

Article  257.  When  a  foreign  business  association 
begins  to  maintain  a  branch  office  in  Japan  before  a 
registration  is  made  at  the  place  of  the  branch 
office,  the  existence  of  the  association  may  be  denied 
by  third  persons. 

Article  258.  If  a  foreign  business  association  has 
its  principal  office  in  Japan  or  its  principal  object  is 
to  carry  on  business  in  Japan,  it  must  be  subject 
to  the  same  provisions  as  a  business  association 
formed  in  Japan,  even  if  it  is  formed  in  a  foreign 
country. 

"What  is  a  foreign  business  association?"  is  a  mooted 
question  in  Japan  which  has  puzzled  the  minds  of  many 
jurists.  Some  maintain  that  the  Japanese  Code  has  adopted 
the  "law  standard  test"  ;  that  is,  whether  a  business  association 
is  foreign  or  domestic  depends  entirely  upon  the  law  under 
which  it  is  formed.  Some  insist  that  Japan  has  adopted 
the  "domicile  test" ;  that  is,  if  the  principal  office  of  the 
association  is  within  Japanese  territory,  it  is  a  domestic 
business  association,  otherwise  it  is  a  foreign  one. 

But  under  the  present  article,  it  is  quite  plain  that  Japan 
adopts  the  "place  of  formation"  test;  that  is,  a  domestic 
business  association  is  a  business  association  formed  in  Japan; 
and  any  business  association  formed  outside  the  territory  of 
Japan  is  a  foreign  business  association.  However,  since  a 
business  association  formed  in  Japan  must  be  subject  to  the 
Japanese  law,  the  natural  consequence  is  that  the  Code 
at  the  same  time  has  adopted  the  "law  standard  test." 
Again,  since  the  principal  office  of  any  association  mentioned 
in  this  Code  always  means  the  principal  office  in  Japan,  it 
naturally  has  adopted  the  "domicile  test."  Thus,  the  Japanese 
law  has  adopted  the  "place  of  formation"  test  as  the  principal 
test  and  the  "law  standard  test"  and  the  "domicile  test"  as 
accessory  tests. 


114  COMMERCIAL  CODE  OF  JAPAN. 

According  to  the  decision  of  the  international  conference 
in  regard  to  societes  anonymes  held  in  Paris,  1889,  and  the 
report  of  the  International  Law  Association  held  in  Hamburg, 
1891,  the  "domicile  test"  seems  to  have  been  universally 
recommended;  and,  indeed,  many  Japanese  writers  claim 
that  Japan  has  adopted  this  principle.  But,  if  so,  it  would  be 
a  matter  of  course  that  any  business  association  having  its 
principal  office  in  Japan  is  a  domestic  association  and  it  would 
have  been  unnecessary  for  this  article  to  declare  that  a  business 
association  formed  in  a  foreign  country  having  its  principal 
office  in  Japan  is  subject  to  the  same  provisions  as  a  similar 
association  formed  in  Japan. 

Article  259.  The  provisions  of  Arts.  147,  149, 
150,  155,  par.  1,  206,  207  and  217,  par.  2,  are  appli- 
cable to  the  issue  of  shares  and  the  transfer  of  shares 
or  bonds  of  a  foreign  company  in  Japan.  In  such 
case  the  branch  office  first  established  in  Japan  is 
considered  as  a  principal  office. 

Article  260.  If  a  representative  of  a  foreign 
business  association  establishing  a  branch  office  in 
Japan  commits  any  act  contrary  to  the  public  order 
or  good  morals  during  the  management  of  the  busi- 
ness of  the  association,  the  court  may  upon  the 
application  of  the  attorney-general  or  by  its  own 
executive  power  order  the  branch  office  to  be  closed. 

SECTION  7.— PENAL  PROVISIONS. 

Article  261.  Promoters,  members  managing  the 
business  of  a  business  association,  directors,  repre- 
sentatives of  foreign  business  associations,  auditors 
or  liquidators  are  punished  by  a  fine  of  from  five 
yen  to  five  hundred  yen  in  the  following  cases: — 


BUSINESS  ASSOCIATIONS.  115 

1.  When  they  neglect  to  make  the  registrations 
provided  for  in  this  Book. 

2.  When  they  neglect  to  make  public  notifica- 
tions or  notices  provided  for  in  this  Book  or  make 
false  public  notifications  or  notices. 

3.  When  they  without  reasonable  cause  refuse 
the  inspection  of  the  books  which  are  allowed  to  be 
inspected  by  the  provisions  of  this  Book. 

4.  When  they  hinder  examinations  provided  for 
in  this  Book. 

5.  When  they  begin  to  make  preparations  for 
opening  business  in  violation  of  the  provisions  of 
Art.  46. 

6.  When  they  omit  to  make  certificates  of  sub- 
scription or  omit  to  set  forth  the  necessary  particu- 
lars in  the  certificates  or  make  a  misrepresentation 
in  the  certificates,  in  violation  of  the  provisions  of 
Arts.  126,  par.  2,  and  238,  par.  2. 

7.  When  they  issue  certificates  in  violation  of  the 
provisions  of  Art.  147,  par.  1,  or  Art.  217,  par.  2. 

8.  When  they  omit  to  set  forth  the  necessary 
particulars  in  a  certificate  or  bond  or  make  a  mis- 
representation thereof. 

9.  When  they  omit  to  keep  at  the  principal  office 
or  any  branch  establishment  the  articles  of  associa- 
tion, the  book  of  shareholders,  the  book  of  bonds, 
the  minute-book  of  the  general  meeting  of  share- 
holders, the  inventories,  the  balance  sheets,  the  busi- 
ness reports,  the  accounts  of  gains  and  losses,  the 
proposals  concerning  the  sinking  fund  and  the  dis- 
tribution of  profits  or  interest;  or  they  omit  to  set 


116  COMMERCIAL  CODE  OF  JAPAN. 

forth   the   necessary   particulars,    or   make   a    mis- 
representation thereof. 

10.  When  they  omit  to  call  a  general  meeting  of 
shareholders  in  violation  of  the  provisions  of  Arts. 
174,  par.  1,  or  198,  par.  2. 

See  Sect.  3,  Chapter  VI,  Penal  Provisions,  Arts.  312-319 
of  the  German  Commercial  Code.  But  the  German  provisions 
are  for  a  societe  anonyme  alone. 

Article  262.  Promoters,  members  managing  the 
business  of  a  business  association,  directors,  repre- 
sentatives of  foreign  business  associations,  auditors, 
or  liquidators  are  punished  by  a  fine  of  from  ten 
yen  to  one  thousand  yen  in  the  following  cases: — 

1.  When  they  make  misrepresentations  to  the 
public  authorities  or  to  the  general  meeting  of  share- 
holders, or  conceal  facts  from  them. 

2.  When  they  carry  out  a  consolidation,  a  dis- 
position of  property  of  the  association,  a  reduction 
of  the  capital  or  an  alteration  of  its  organization  in 
violation  of  the  provisions  of  Arts.  78-80. 

3.  When  they  hinder  the  examination  made  by 
inspectors. 

4.  When  they  acquire  shares  or  take  them  as 
security  or  cancel  shares,  in  violation  of  the  provi- 
sions of  Art.  151. 

5.  When  they  issue  certificates  to  bearer  in  vio- 
lation of  the  provisions  of  Art.  155,  par.  1. 

6.  When  they  neglect  to  apply  for  a  declaration 
of  bankruptcy  in  violation  of  the  provisions  of 
Art.  174,  par.  2,  or  Art.  81  of  the  Civil  Code.1 


BUSINESS  ASSOCIATIONS.  117 

7.  When  they  omit  to  set  apart  a  sinking  fund 
in  violation  of  the  provisions  of  Art.  194  or  make 
distributions  in  violation  of  the  provisions  of  Art. 
195,  par.  1,  or  Art.  196. 

8.  When  they  invite  subscriptions  for  bonds  in 
violation  of  the  provisions  of  Art.  200. 

9.  When  they  act  contrary  to  an  order  of  the 
court  issued  according  to  the  provision  of  Art.  260. 

10.  When  they  make  payment  to  certain  creditors 
within  the  period  mentioned  in  Art.  79  of  the  Civil 
Code2  or  distribute  property  of  the  company  in  vio- 
lation of  the  provision  of  Art.  95  of  this  Code. 

1  See  notes  to  Art.  91,  par.  3,  supra. 

2  See  note  to  Art.  234,  supra. 


BOOK  III. 

COMMERCIAL  TRANSACTIONS. 


SECTION  1.— GENERAL  PROVISIONS. 

Article  263.  The  following  are  commercial  trans- 
actions:1— 

1.  Transactions  aiming  at  the  acquisition  for  a 
consideration  of  movables,2  immovables  or  securi- 
ties3 with  the  intention4  of  disposing  of  them  for 
profit;  or  the  disposal  of  the  movables,  immovables 
or  securities  thus  acquired.5 

2.  Contracts  for  the  supply  of  movables  or  securi- 
ties6 which  are  to  be  acquired  from  other  persons, 
and  transactions  aiming  at  the  acquisition  for  a 
consideration  of  such  movables  or  securities  for  the 
performance  of  such  contract.7 

3.  Dealings  on  the  exchange.8 

4.  Transactions  concerning  bills,  notes,  checks9 
and  other  commercial  papers.10 

1  These  are  absolute  commercial  transactions.  See  notes 
to  Art.  4,  supra. 

2  In  former  times,  any  transaction  relating  to  immovable 
property  was  not  treated  as  commercial.  Thus,  Art.  275  of 
the  old  German  Commercial  Code  and  Art  262  of  the  Hun- 
garian Commercial  Code  expressly  declare  that  any  contract 
relating  to  immovable  property  is  not  a  commercial  transac- 
tion.   But,  in  the  present  business  world,  immovable  property 


120  COMMERCIAL  CODE  OF  JAPAN. 

is  very  often  acquired  or  disposed  of  for  the  purpose  of  gaining 
profit;  and  therefore  it  acquires  nearly  as  much  "commercial 
character"  as  personal  property  and  may  be  the  object  of  a 
commercial  transaction.  However,  Art.  1  of  the  present 
German  Commercial  Code  still  excludes  immovables  as  an 
object  of  commercial  transactions. 

3  "Securities"  are  held  to  be  certificates  of  shares,  and 
bonds  issued  by  government,  public  or  private  corporations. 
Other  commercial  papers,  such  as  bills,  notes,  bills  of  lading, 
warehouse  receipts,  etc.,  are  not  securities  within  the  meaning 
of  this  article. 

4  Thus,  whether  a  transaction  is  commercial  or  non-com- 
mercial depends  on  such  an  intention  at  the  time  of  the 
transaction.  If  a  gentleman  buys  some  goods  with  the 
intention  of  consuming  them  himself  but  afterwards  changing 
his  mind  intends  to  sell  them  for  profit,  the  transaction 
of  purchase  does  not  by  this  change  of  intention  become  a 
commercial  transaction  and  the  commercial  law  has  no 
application.  In  such  a  case  it  is  very  difficult  for  a  vendor 
to  find  out  the  intention  of  the  vendee,  and  the  application 
of  either  the  Commercial  Code  or  the  Civil  Code  may  result 
in  an  unexpected  damage  to  the  vendor. 

This  is  the  natural  consequence  or  defect  of  the  theory 
adopted  by  those  Codes  based  on  the  French  system  of 
jurisprudence;  that  is,  the  theory  which  recognizes  a  differ- 
ence between  an  absolute  commercial  transaction  and  a 
relative  commercial  transaction.     See  notes  to  Art.  4,  supra. 

5  Derived  from  Art.  632,  par.  1,  of  the  French  Commercial 
Code,  Art.  271,  par.  1,  of  the  old  German  Commercial  Code, 
and  Art.  3,  par.  1,  of  the  Italian  Commercial  Code. 

6  Here  immovable  property  is  excluded,  for  from  its  nature 
it  is  practically  never  made  the  subject  of  such  a  contract. 

7  Derived  from  the  Commercial  Codes  of  France,  Italy, 
and  the  old  German  Commercial  Code. 

8  According  to  the  Exchange  Act  of  Japan,  none  but 
certain    traders    may    transact    business    in    any    exchange. 


COMMERCIAL  TRANSACTIONS.  121  r 

As  dealings  on  exchange  are  confined  to  traders,  it  was 
unnecessary  to  especially  provide  that  "dealings  on  the 
exchange"  are  absolute  commercial  transactions. 

9  Since  the  law  pertaining  to  bills,  notes  and  checks  in  Japan, 
instead  of  being  the  subject  of  a  special  statute  as  in  Germany, 
is  part  of  the  Commercial  Code,  it  is  necessary  to  apply  the 
general  principles  of  the  Code  to  all  transactions  relating  to 
such  instruments,  irrespective  of  the  character  of  the  parties 
to   the   transactions. 

10  The  commercial  papers  spoken  of  are  way  bills,  warehouse 
instruments,  and  bills  of  lading.  The  term  must  be  strictly 
construed  as  equivalent  to  the  term  "negotiable  instruments." 
A  contract  containing  as  one  of  its  provisions  a  promise 
to  pay  money  would  not  be  a  "commercial  paper"  within  the 
meaning  of  this  article. 


Article  264.  The  following  transactions,  if  carried 
on  as  a  business,  are  commercial  transactions  except 
in  those  cases  where  goods  are  manufactured,  or 
services  rendered  only  for  the  purpose  of  earning 
wages:1 — 

1.  Transactions  aiming  at  the  acquisition  for  a 
consideration  or  at  the  hiring  of  movables  or  immov- 
ables with  the  intention  of  letting  them;  or  the 
letting  of  movables  or  immovables  thus  acquired 
or  hired.2 

2.  Transactions  concerning  the  manufacturing 
or  improving  of  goods  for  other  persons.3 

3.  Transactions  concerning  the  supplying  of  elec- 
tricity or  gas. 

4.  Transactions  concerning  carriage.4 

5.  The  making  of  a  contract  for  doing  work  or 
furnishing  labor.5 


122  COMMERCIAL  CODE  OF  JAPAN. 

6.  Transactions  concerning  publishing,  printing 
or  photographing.8 

7.  The  conduct  of  any  public  house  for  the  pur- 
pose of  entertaining  guests.7 

8.  Money  changing  or  other  banking  business.8 

9.  Insurance.9 

10.  Acceptance  of  deposits.10 

11.  Transactions    concerning  brokerage    or    com- 
mission.11 

12.  Acceptance  of    agency  for  commercial  trans- 
actions.12 

1  These  are  relative  commercial  transactions.  See  notes 
to  Art.  4,  supra. 

Art.  1  of  the  German  Commercial  Code  reads  as  follows : — 

"A  trader  within  the  meaning  of  this  Code  is  he  who  carries 
on  a  trade. 

"Every  undertaking  having  one  of  the  following  enumerated 
objects  is  held  to  be  a  trade: — 

"(I)  The  buying  and  re-selling  of  movable  goods  or 
valuables,  it  making  no  difference  whether  the  goods  are 
re-sold  in  the  condition  in  which  they  are  received  or  whether 
they  undergo  any  transmutation  or  preparation  previous 
to  such  re-sale. 

"(II)  Any  undertaking  having  for  its  object  the  trans- 
formation or  preparation  of  goods  on  account  of  any  third 
party,  so  far  as  such  operation  exceeds  the  limit  of  mere 
manual  labor. 

"(Ill)     Any  insurance  business. 

"(IV)     Any  banking  or  money  changing  business. 

"(V)  Any  undertaking  to  transport  goods  or  persons 
by  sea,  any  carrier's  business  or  one  having  for  its  object  the 
transportation  of  persons  over  land  or  by  canal,  as  well  as 
the  business  of  towing. 

"(VI)  The  business  of  commission  merchants,  forwarding 
agents,  and  bonders  of  goods. 


COMMERCIAL  TRANSACTIONS.  123 

"(VII)     The  business  of  agents  and  brokers. 

"(VIII)  The  business  of  publisher,  as  well  as  all  matters 
relating  to  trade  in  books  and  objects  of  art. 

"(IX)  The  business  of  printing  so  far  as  it  exceeds  mere 
manual  labor." 

2  But  according  to  Art.  632  of  the  French  Commercial 
Code  and  Art.  3  of  the  Italian  Commercial  Code,  these  are 
held  to  be  absolute  commercial  transactions. 

3  Derived  from  Art.  632,  par.  2,  of  the  French  Commercial 
Code,  Art.  272,  par.  1,  of  the  old  German  Commercial  Code, 
and  Art.  3,  par.  8,  of  the  Italian  Commercial  Code. 

4  Any  contract  of  carriage  is  a  relative  commercial  transac- 
tion, whether  the  goods  or  persons  may  be  carried  by  land  or 
by  sea.  This  is  derived  from  Art.  632,  par.  2,  of  the  French 
Commercial  Code,  and  Art.  3,  par.  13,  of  the  Italian  Commer- 
cial Code.  According  to  the  old  German  Commercial  Code, 
marine  transportation  was  held  to  be  an  absolute  commercial 
transaction,  though  land  transportation  was  a  relative 
commercial  transaction.  But  the  present  German  Code 
has  abandoned  the  difference  between  an  absolute  commercial 
transaction  and  a  relative  commercial  transaction  as  well  as 
the  difference  between  marine  transportation  and  land 
transportation. 

5  Here  the  "work"  denotes  any  work  done  to  certain 
immovable  property,  such  as  building  houses,  bridges,  etc.; 
and  the  "labor"  means  that  only  physical  labor  is  furnished, 
the  contractor  not  being  responsible  for  the  accomplishment 
of  a  particular  work. 

This  is  derived  from  Art.  3,  par.  7,  of  the  Italian  Commer- 
cial Code. 

6  Derived  from  Art.  272,  par.  5,  of  the  old  German  Com- 
mercial Code,  and  Art.  3,  par.  10,  of  the  Italian  Commercial 
Code,  except  that  the  word  "photographing"  has  been  added 
by  the  Japanese  legislators. 

7  Derived  from  Art.  632,  par.  3,  of  the  French  Commer- 
cial Code,  and  Art.  3,  par.  9,  of  the  Italian  Commercial  Code. 


124  COMMERCIAL  CODE  OF  JAPAN. 

8  Derived  from  Art.  632,  pars.  4  and  5,  of  the  French  Com- 
mercial Code,  Art.  272,  par.  2,  of  the  old  German  Commercial 
Code,  and  Art.  3,  par.   11,  of  the  Italian  Commercial  Code. 

9  Mutual  insurance  is  excepted.  According  to  Art.  271,  par. 
3,  of  the  old  German  Commercial  Code,  a  contract  of  insurance 
was  an  absolute  commercial  transaction.  In  Italy,  even 
mutual  insurance  is  treated  as  an  absolute  commercial  trans- 
action.   See  Art.  3,  pars.  19  and  20,  of  the  Italian  Code. 

10  I.e.  The  care  of  property  for  reward,  as  in  a  warehouse. 
Derived  from  Art.  259,  par.  4,  of  the  Hungarian  Commercial 
Code,  and  Art.  3,  pars.  23  and  24,  of  the  Italian  Commercial 
Code.  There  is  no  such  provision  in  the  French  and  old 
German  Commercial  Codes. 

11  Derived  from  Art.  632,  pars.  2  and  4,  of  the  French 
Commercial  Code,  Art.  272,  pars.  3  and  4,  of  the  old  German 
Commercial  Code,  and  Art.  3,  pars.  20  and  22,  of  the  Italian 
Commercial  Code. 

12  I.e.  Assuming  to  represent  a  certain  trader  as  his  agent- 
Derived  from  Art.  632,  par.  3,  of  the  French  Commercial 
Code,  and  Art.  3,  par.  21,  of  the  Italian  Commercial  Code. 

Article  265.  Transactions  done  by  a  trader  for 
the  sake  of  his  business  are  commercial  transactions.1 

The  transactions  of  a  trader  are  presumed  to  be 
done  for  the  sake  of  his  business.2 

1  These  are  accessory  commercial  transactions.  For 
instance,  when  a  warehouse  company  deposits  money  with 
a  bank,  or  a  common  carrier  makes  an  insurance  contract  with 
an  insurance  company,  these  are  accessory  transactions  on 
the  part  of  the  warehouse  or  the  common  carrier,  though  at 
the  same  time  they  are  relative  transactions  on  the  part  of 
the  bank  or  the  insurance  company. 

2  For  instance,  if  the  proprietor  of  a  manufacturing  company 
buys  a  certain  amount  of  coal  for  the  sole  use  of  his  family, 
the  principles  of  the  Commercial  Code  will  be  applied  if  the 


COMMERCIAL  TRANSACTIONS.  125 

presumption  cannot  be  rebutted  by  proof.  In  case  part  of 
the  coal  is  for  the  family  and  the  other  part  for  the  manu- 
facturing company,  the  whole  transaction  must  be  treated 
as  a  commercial  transaction  under  the  present  article  and 
Art.  3,  supra. 

This  article  corresponds  to  Arts.  343  and  344  of  the 
German  Commercial  Code. 

Article  266.  Even  though  an  agent  for  a  com- 
mercial transaction  has  not  disclosed  the  fact  that 
he  is  acting  for  his  principal,  the  transaction  has 
effect  against  the  principal;  but  if  the  other  party 
did  not  know  that  the  agent  was  acting  for  the 
principal,  his  right  to  claim  performance  against 
the  agent  will  not  be  affected. 

This  is  an  exception  to  Art.  100  of  the  Civil  Code,  according 
to  which  such  a  transaction  would  have  no  effect  against  the 
undisclosed  principal  and  be  treated  as  done  on  account  of 
the  agent  himself,  unless  the  other  party  knew  or  had  reason 
to  know  the  fact  that  the  transaction  was  done  on  account 
of  the  principal. 

Article  267.  An  attorney  for  a  commercial  trans- 
action may  do  acts  not  expressed  in  the  attorney- 
ship contract,  when  he  acts  within  the  scope  of  the 
transaction  and  not  contrary  to  the  object  of  the 
attorneyship. 

Article  268.  An  authority  arising  from  an  attor- 
neyship contract  for  a  commercial  transaction  is  not 
terminated  by  the  death  of  the  principal. 

According  to  Art.  Ill  of  the  Civil  Code,  the  authority  will 
be  terminated  by  the  death,  incompetency  or  bankruptcy  of 
the  principal. 


126  COMMERCIAL  CODE  OF  JAPAN. 

Article  269.  When  an  offer  for  a  contract  is 
made  between  parties  present,  it  will  lose  its  effect 
if  the  offeree  does  not  accept  it  immediately. 

According  to  the  principle  of  the  Civil  Code,  such  an  offer 
to  make  a  contract  will  remain  effective  until  it  is  refused 
or  accepted  by  the  offeree.  Thus,  if  the  offeree  does  not 
refuse  it  and  leaves  it  alone  for  a  certain  time,  he  may  suddenly 
accept  it  afterwards,  and  a  valid  contract  may  be  completed 
by  such  acceptance.  But  under  the  present  article,  there  is 
no  existing  contract  in  such  case,  for  the  acceptance  is  too 
late. 

"Parties  present"  means  that  the  offer  is  made  in  the 
presence  of  the  offeror  and  the  offeree  or  that  the  idea  of  the 
offeror  can  be  instantly  transfered  to  the  offeree.  Thus,  if 
the  conversation  between  the  parties  is  carried  on  through 
an  interpreter  or  by  telephone,  this  will  be  construed  as 
"parties  present,"  but  if  the  offer  is  made  through  a  messenger 
or  by  telegraph,  such  offer  must  be  held  as  between  "parties 
absent"  within  the  meaning  of  the  next  article. 

Article  270.  When  an  offer  for  making  a  contract 
is  made  between  parties  absent  and  no  time  for  its 
acceptance  is  fixed  by  the  offeror,  it  will  lose  its  effect 
if  the  offeree  does  not  give  notice  of  acceptance 
within  a  reasonable  time.1 

In  such  case  the  provision  of  Art.  523  of  the  Civil 
Code  is  applicable.2 

1  According  to  Art.  524  of  the  Civil  Code,  if  an  offer  is 
made  between  parties  absent  and  no  time  for  its  acceptance 
is  fixed  by  the  offeror,  he  cannot  withdraw  the  offer  within 
a  reasonable  time  necessary  for  receiving  the  notice  of  accept- 
ance; that  is,  though,  after  a  reasonable  time  necessary  for 
receiving  the  notice  of  acceptance,  the  offeror  may  withdraw 
the  offer,  the  mere  fact  that  the  offeree  has  given  no  notice 


COMMERCIAL  TRANSACTIONS.  127  - 

of  acceptance  does  not  make  the  offer  lose  its  effect.  Neither 
does  the  offer  lose  its  effect  by  a  mere  lapse  of  the  time 
necessary  for  receiving  the  notice  of  acceptance  unless  the 
offeror  manifests  a  will  to  withdraw  it.  The  consequence 
of  the  principle  of  the  Civil  Code  is,  therefore,  that  the  offeror 
is  bound  by  his  offer  for  a  longer  period  than  the  offeror  under 
the  Commercial  Code. 

2  Art.  523  of  the  Civil  Code  provides  that  a  delayed  accept- 
ance may  be  treated  by  the  offeror  as  a  new  offer  from  the 
offeree. 

Article  271.  When  an  offer  to  a  trader  for  a 
contract  which  is  within  the  scope  of  his  business 
is  made  by  a  person  with  whom  the  trader  regularly 
deals,  he  shall  give  notice  of  acceptance  or  refusal 
without  delay.  If  he  neglects  to  give  such  notice, 
he  is  deemed  to  have  accepted  the  offer. 

According  to  the  principle  of  the  Civil  Code,  the  offeree 
is  under  no  obligation  to  give  notice  of  acceptance  or  refusal 
and  the  mere  fact  that  he  gives  no  notice  does  not  make 
him  liable  as  if  he  had  accepted  the  offer. 

Art.  362,  par.  1,  of  the  German  Commercial  Code  reads 
as  follows: — 

"When  a  trader  whose  business  comprises  the  transaction 
of  business  for  a  third  party  receives  a  commission,  relating 
to  such  kind  of  transaction,  from  a  person  with  whom  he 
has  such  business  relations,  he  is  bound  to  answer  him  without 
delay,  and  his  silence  is  considered  acceptation  of  the  com- 
mission. It  is  the  same  when  a  trader  having  offered  his 
services  to  a  third  person  to  look  after  certain  business, 
receives  from  such  third  person  a  commission  to  do  so." 

Article  272.  When  an  offer  is  made  to  a  trader 
for  a  contract  which  is  within  the  scope  of  his  busi- 
ness, and  together  with  such  offer  goods  are  received, 


128  COMMERCIAL  CODE  OF  JAPAN. 

the  trader  shall  safely  keep  the  goods  at  the  expense 
of  the  offeror,  even  if  the  offer  is  refused. 

But  this  will  not  be  applied  to  the  case  where  the 
value  of  the  goods  is  not  sufficient  to  cover  the 
expense  of  their  keeping  or  the  trader  may  suffer  a 
damage  by  keeping  them. 

For  instance,  explosives,  etc. 

The  general  principle  of  the  Civil  Code  is,  that  the  offeree 
receiving  such  goods  is  under  no  obligation  to  send  them  back 
or  keep  them  for  the  offeror. 

Art.  362,  par.  2,  of  the  German  Commercial  Code  reads  as 
follows : — 

"Such  trader  (offeree)  even  if  he  has  refused  the  commission, 
is  no  less  bound  to  take  proper  measures  to  guarantee  any 
goods  sent  to  him  from  all  damage,  at  the  sender's  expense, 
to  the  extent  for  which  he  may  expect  reimbursement  and 
without  prejudice  to  himself." 

Article  273.  When  several  persons  incur  a  debt 
arising  from  a  commercial  transaction  for  one  or  all 
of  them,  they  are  severally  and  jointly  liable  for 
such  debt.1 

If,  in  case  of  a  surety,  the  debt  has  arisen  from  a 
commercial  transaction  of  the  principal  debtor,2  or 
the  suretyship  is  a  commercial  transaction,3  the 
principal  debtor  and  the  surety  are  severally  and 
jointly  liable  for  the  debt,  even  though  they  assume 
it  by  separate  acts.4 

1  According  to  Art.  427  of  the  Civil  Code,  in  case  there  are 
several  debtors  each  debtor  is  only  liable  for  his  propor- 
tionate share,  in  the  absence  of  a  manifestation  of  will  to  the 
contrary;  that  is,  in  a  civil  transaction  a  joint  liability  is 
not  presumed  unless  there  is  a  special  contract  between  the 


COMMERCIAL  TRANSACTIONS.  129 

parties.  This  provision  is  not  adopted  from  European 
counties,  but  based  on  the  business  custom  of  Japan.  Accord- 
ing to  Art.  427  of  the  German  Civil  Code  the  principle  of 
joint  liability  is  applied  to  a  civil  transaction  as  well  as  to 
a  commercial  transaction. 

If  A  and  B  join  together  and  buy  a  certain  amount  of  rice 
from  a  farmer,  A  being  a  rice  dealer,  on  his  part  the  transac- 
tion is  commercial.  B,  a  non-trader,  buys  the  rice  for  his 
own  use,  and  therefore,  on  his  part,  the  transaction  is  non- 
commercial. But  under  the  present  article  both  A  and  B  are 
severally  and  jointly  liable  to  the  farmer,  for  the  debt 
arises  from  "a  commercial  transaction  on  account  of  one  of 
them." 

A  transaction,  in  order  to  be  subject  to  the  principle  of 
joint  liability  under  the  present  article,  must  be  a  commercial 
transaction  on  the  part  of  one  or  all  of  the  debtors  from  which 
their  obligation  arises.  If  it  is  only  a  commercial  transaction 
on  the  part  of  creditors,  the  principle  of  joint  liability  has  no 
application.  According  to  Art.  3,  the  provisions  of  this  Code 
are  applicable  to  both  parties  if  the  transaction  on  the  part 
of  one  of  them  is  a  commercial  transaction.  But  it  does  not 
follow  that  the  non-commercial  transaction  of  the  other 
party  is  by  this  article  changed  into  a  commercial  transac- 
tion. Thus,  if  A  and  B  join  together  and  borrow  a  certain 
amount  of  money  from  a  bank  for  their  domestic  expenses, 
A  and  B  are  not  severally  and  jointly  liable,  for  this  is  only 
a  commercial  transaction  on  the  part  of  the  bank  and  the 
transaction  from  which  the  debt  arises  is  still  non-commercial 
and  subject  to  Art.  427  of  the  Civil  Code. 

2  Thus,  if  the  debt  has  arisen  from  a  commercial  transaction 
of  the  creditor  only,  the  principle  of  Art.  427  of  the  Civil  Code 
is  still  applicable. 

3  I.e.  When  a  trader  for  the  sake  of  his  business  assumes  a 
suretyship,  or  in  other  words,  when  the  suretyship  is  an 
accessory  commercial  transaction.  See  Art.  265.  In  such 
case,  whether  the  transaction  of  the  principal  debtor  is  com- 


130  COMMERCIAL  CODE  OF  JAPAN. 

mercial  or  non-commercial  is  immaterial;  the  principal  and 
the  surety  are  severally  and  jointly  liable. 

4  According  to  Arts.  452  and  453  of  the  Civil  Code  a  surety 
may  insist  that  the  creditor  exhaust  his  legal  remedies  against 
the  principal  debtor  before  demanding  payment  from  the 
surety.  Again,  if  there  are  several  sureties,  each  surety 
is  only  liable  for  his  proportionate  share  in  accordance  with 
the  principle  of  Art.  427  of  the  Civil  Code. 

This  paragraph  is  derived  from  Art.  281,  par.  2,  of  the  old 
German  Commercial  Code. 

Article  274.  When  a  trader  has  carried  on  a  com- 
mercial transaction  within  the  scope  of  his  own 
business  on  behalf  of  another  person,  he  may  demand 
a  reasonable  compensation. 

Under  the  Civil  Code  such  a  person  cannot  demand  a 
compensation  unless  there  is  an  agreement  between  parties. 

Derived  from  Art.  354,  par.  1,  of  the  German  Commercial 
Code. 

Article  275.  When  money  is  lent  between 
traders,  the  lender  may  demand  legal  interest.1 

When  a  trader  pays  money  within  the  scope  of 
his  own  business  on  behalf  of  another  person,  he 
may  demand  legal  interest  thereon  from  the  day  of 
its  advancement.2 

1  Under  the  Civil  Code  interest  cannot  be  demanded  unless 
there  is  an  agreement  between  the  parties. 

Corresponds  to  Art.  353  of  the  German  Commercial  Code. 

2  Corresponds  to  Art.  354,  par.  2,  of  the  German  Commercial 
Code. 

Article  276.  In  regard  to  debts  arising  from 
commercial  transactions,  the  rate  of  legal  interest  is 
six  per  centum  per  annum. 


COMMERCIAL  TRANSACTIONS.  131 

The  rate  of  legal  interest  under  the  Civil  Code  is  five  per 
centum  per  annum. 

The  rate  of  legal  interest  under  the  German  Civil  Code  is 
four  per  centum  per  annum,  but  under  the  German  Com- 
mercial Code  is  five  per  centum  per  annum.  The  French  and 
Italian  Codes  are  the  same  as  the  German  Codes. 

Article  277.  The  provisions  of  Art.  349  of  the 
Civil  Code  are  not  applicable  to  a  pledge  created  as 
security  for  a  debt  arising  from  a  commercial  trans- 
action. 

If  a  pledgor  cannot  pay  his  debt  when  due,  the  pledgee 
may  sell  the  security  by  auction;  if  the  money  arising  from 
the  sale  is  not  enough  to  satisfy  him,  he  may  demand  the 
rest,  and  if  the  amount  of  the  money  is  more  than  the  debt, 
he  is  obliged  to  return  the  difference  to  the  debtor.  This  is 
the  general  principle  of  the  civil  law. 

But,  it  is  the  Japanese  custom  that  when  a  debtor  borrows 
money  on  security,  he  generally  makes  a  special  agreement 
that  on  his  default  in  payment  the  pledgee  shall  get  the  title 
to  the  property  and  therefore  dispose  of  it  at  his  will.  When 
the  draft  of  the  Japanese  Civil  Code  was  being  passed,  the 
Diet  insisted  that  a  provision  must  be  inserted  to  prohibit 
such  a  contract  and  make  it  illegal.  In  this  they  succeeded, 
and  Article  349  of  the  Civil  Code  was  thus  adopted. 

The  provision  of  Art.  349  of  the  Civil  Code  is  not  only  an 
unnecessary  interference  with  the  banking  business,  but  is 
also  contradictory  to  the  Pawnshop  Act,  by  which  the 
contract  made  between  a  pledgor  and  pledgee  as  mentioned 
above  is  recognized.  For  these  reasons  the  present  article  of 
this  Code  provides,  in  order  to  meet  the  demand  of  the  business 
world,  that  the  Civil  Code  shall  not  apply.  The  result  is  that 
in  commercial  transactions  when  a  person  borrows  money, 
the  lender  may  insist  on  his  giving  a  pledge  far  above  the 
value  of  the  loan,  which  on  failure  to  pay  the  loan  promptly 
will  become  the  absolute  property  of  the  lender. 


132  COMMERCIAL  CODE  OF  JAPAN. 

Article  278.  When  the  place  in  which  an  obliga- 
tion arising  from  a  commercial  transaction  is  to  be 
performed  is  not  fixed  by  the  nature  of  the  transaction 
or  by  a  manifestation  of  the  will  of  the  parties,  the 
delivery  of  specified  property  shall  be  made  at  the 
place  in  which  the  property  exists  at  the  time  of  the 
transaction,  and  any  other  performance  shall  be 
made  at  the  present  seat  of  business  of  the  creditor, 
or  if  there  is  no  seat  of  business,  at  his  residence. 

Payment  of  commercial  paper  payable  to  order  or 
to  bearer  shall  be  made  at  the  present  seat  of  busi- 
ness of  the  debtor,  or  if  there  is  no  seat  of  business, 
at  his  residence. 

A  branch  office  is  treated  as  the  seat  of  business 
where  the  transaction  in  which  the  obligation 
originated  took  place  at  the  branch  office. 

These  provisions  are  substantially  the  same  as  Art.  484  of 
the  Civil  Code. 

In  Germany  the  principle  of  dette  querable  is  adopted ;  that 
is,  an  obligation  is  generally  performed  at  the  residence  of  the 
obligor  except  a  pecuniary  obligation  which  must  be  per- 
formed at  the  residence  of  the  creditor.  See  Art.  324  of  the 
old  German  Commercial  Code,  and  Art.  269  of  the  German 
Civil  Code.  The  same  principle  is  also  adopted  in  France. 
See  Art.  1247  of  the  French  Civil  Code.  On  the  contrary,  in 
Japan  the  principle  of  dette  portable  is  adopted;  that  is,  an 
obligation  is  generally  performed  at  the  residence  of  the 
obligee,  as  provided  by  the  present  article  and  Art.  484  of 
the  Civil  Code.  But  as  to  negotiable  instruments,  the 
principle  of  dette  querable  is  adopted,  as  provided  in  the 
present  article,  paragraph  2. 

Article  279.  The  debtor  on  commercial  paper 
payable  to  order  or  to  bearer,  even  if  its  payment 


COMMERCIAL  TRANSACTIONS.  133 

must  be  made  at  a  definite  time,  is  responsible  for 
his  delay  only  from  the  day  when  the  holder  of  such 
paper  at  the  time  of  maturity  presents  it  for  pay- 
ment. 

According  to  Art.  412  of  the  Civil  Code,  the  debtor  is 
responsible  for  his  delay  from  the  day  on  which  the  debt 
is  due,  if  the  time  of  payment  is  fixed.  But  a  negotiable 
instrument  is  a  presentation  paper  {Prdsentations  papier) 
and  the  debt  is  due  as  soon  as  the  creditor  presents  it  to  the 
debtor.  The  natural  consequence  of  this  is  that  a  negotiable 
debt  is  always  a  dette  querable;  for  if  it  were  a  dette  portable 
the  debtor  might  be  unable  to  find  the  creditor. 

Article  280.  The  provisions  of  Arts.  278,  par.  2, 
and  279  are  applicable  to  the  debt  mentioned  in 
Art.  471  of  the  Civil  Code. 

The  paper  referred  to  is  paper  payable  to  a  particular 
person  designated  in  the  paper  or  at  the  same  time  payable 
to  its  bearer. 

Article  281.  In  case  a  commercial  paper  payable 
to  order  or  bearer,  the  object  of  which  is  the  pay- 
ment of  money  or  the  consignment  of  any  other  prop- 
erty,1 has  been  lost,  the  original  holder,  after  taking 
the  procedure  of  a  public  summons,2  may  make  the 
debtor  deposit  the  subject-matter,  or,  provided  the 
creditor  gives  a  suitable  security,  he  may  even  enforce 
a  performance  in  accordance  with  the  contents  of  the 
paper.3 

1  This  expression  is  rather  unnecessary,  for  a  paper  whose 
object  is  to  render  service  can  hardly  be  a  negotiable  in- 
strument. 

2  The  holder  must  present  a  copy  or  the  substance  of  the 
instrument    to    the  court  and    explain    how  the    instrument 


134  COMMERCIAL  CODE  OF  JAPAN. 

has  been  lost.  The  court  will  give  a  public  notification, 
requiring  the  person  who  has  acquired  the  instrument  to 
appear  in  the  court.  If  no  such  person  appears  during  six 
months,  the  court  will  declare  that  the  lost  instrument  shall 
be  void.  See  Arts.  780,  781,  782  and  783  of  the  Code  of 
Civil  Procedure. 

3  This  is  an  exception  to  the  fundamental  principle  that 
in  order  to  set  up  a  claim  upon  a  negotiable  instrument 
it  is  necessary  to  present  the  instrument  to  the  debtor;  for 
here  the  creditor  can  enforce  his  right  even  though  the 
instrument  is  not  in  his  possession.  But,  of  course,  the  debt 
must  be  due. 

The  procedure  of  a  public  summons,  as  above  mentioned, 
will  take  six  months.  During  this  period  of  time  the  debtor 
may  dispose  of  the  subject-matter  or  become  a  bankrupt 
to  the  prejudice  of  the  creditor.  For  this  reason,  the  present 
article  gives  the  creditor  a  right  either  to  make  the  debtor 
deposit  the  subject-matter  or  to  enforce  a  performance 
according  to  the  content. 

This  article  is  derived  from  Art.  73  of  the  Commercial- 
paper  Act  of  Germany,  Art.  305,  par.  2,  of  the  old  German 
Commercial  Code,  and  Art.  365,  pars.  2  and  3,  of  the  present 
German  Commercial  Code. 

Article  282.  The  provisions  of  Arts.  441,  457, 
461  and  464  are  applicable  to  a  commercial  paper 
payable  to  order,  the  object  of  which  is  the  payment 
of  money  or  the  consignment  of  any  other  property. 

The  articles  referred  to  are  provisions  for  bills,  notes  and 
checks.     See  infra. 

Article  283.  When  business  hours  are  fixed  by 
law  or  custom,  the  performance  of  an  obligation  can 
be  made  or  demanded  only  during  such  business  hours. 

Derived  from  Arts.  358  and  359  of  the  German  Commercial 
Code. 


COMMERCIAL  TRANSACTIONS.  135 

Article  284.  When  a  debt,  arising  from  a  trans- 
action between  traders  which  on  both  sides  is  a 
commercial  transaction,  is  at  the  time  of  maturity, 
the  creditor  may  retain  such  property  of  the  debtor 
as  comes  into  the  possession  of  the  creditor  through 
a  commercial  transaction  between  them,  until  the 
debt  is  satisfied.  But  this  is  not  applicable  to  the 
case  where  there  is  a  different  manifestation  of  will. 

Derived  from  Art.  369  of  the  German  Commercial  Code. 
See  notes  to  Art.  41,  supra. 

Article  285.  A  debt  arising  from  a  commercial 
transaction  is  barred  by  prescription  if  the  creditor 
does  not  claim  it  for  five  years,  except  in  those  cases 
where  there  are  special  provisions  in  this  Code.  But 
if  a  shorter  period  is  fixed  by  law,  such  provision  will 
be  enforced. 

According  to  Art.  167,  par.  1,  of  the  Civil  Code  a  debt  is 
barred  if  the  creditor  does  not  claim  it  for  ten  years. 

SECTION  2.— SALE. 

Article  286.  In  case  of  a  sale  between  traders, 
if  the  vendee  refuses  or  is  unable  to  accept  the 
subject-matter  the  vendor  may  deposit  it,1  or  after 
he  has  notified  the  vendee  to  accept  it  within  a 
reasonable  time,  may  sell  it  by  auction.  In  such 
case  the  vendor  must  without  delay  give  notice 
thereof  to  the  vendee. 

In  case  the  goods  are  liable  to  deteriorate,  he  may 
sell  them  by  auction  without  such  notification. 

The   vendor   having   sold  the   subject-matter   by 


136  COMMERCIAL  CODE  OF  JAPAN. 

auction  as  mentioned  above  shall  deposit  the  money 
arising  from  the  sale;  but  he  may  appropriate  the 
whole  or  part  of  it  as  purchase  money.2 

1  As  to  the  method  and  procedure  of  depositing  such  goods, 
see  Arts.  495  and  496  of  the  Civil  Code  and  the  Deposit  Act. 

2  This  article  corresponds  to  Art.  374  of  the  German 
Commercial  Code. 

Article  287.  If  from  the  nature  of  the  sale  or 
from  the  manifestation  of  the  will  of  the  parties,  the 
object  of  the  contract  cannot  be  accomplished  unless 
by  performance  at  a  certain  time  or  within  a  certain 
period  of  time,1  and  one  party  lets  the  time  elapse 
without  performing  the  contract,  it  is  deemed  to 
have  been  terminated,  unless  the  other  party  directly 
demands  performance.2 

1  For  instance,  a  person  orders  a  banquet  for  the  celebration 
of  a  certain  festival,  etc. 

2  I.e.  Unless  immediately  after  the  expiration  of  the  time 
or  at  the  end  of  the  delay  agreed  on,  he  has  given  notice  to  the 
other  party  that  he  insists  on  execution  of  the  contract. 

Corresponds  to  Art.  376,  par.  1,  of  the  German  Commercial 
Code. 

Article  288.  In  the  case  of  a  sale  between  traders ? 
the  vendee  having  received  the  subject-matter  must 
examine  it  without  delay,  and  if  any  defect  in 
quality  or  deficiency  in  quantity  is  discovered,  he 
must  instantly  give  notice  to  the  vendor;  otherwise, 
he  cannot  terminate  the  contract,  reduce  the  price, 
or  demand  damages  on  the  ground  of  the  defect 
or   deficiency.1     In   case   there   are   defects    in    the 


COMMERCIAL  TRANSACTIONS.  137 

subject-matter  which  cannot  be  discovered  at  once 
and  the  vendee  discovers  them  within  six  months, 
the  same  rule  is  applicable. 

These  provisions  are  not  applicable  where  the 
vendor  has  acted  in  bad  faith.2 

1  According  to  the  Civil  Code,  such  a  vendee  has  a  right  to 
demand  the  reduction  of  the  price,  the  termination  of  the 
contract  or  damages  within  a  year,  but  as  to  whether  he  is 
obliged  to  examine  the  goods  and  give  notice  thereof  to  the 
vendor,  there  is  no  special  provision. 

2  This  article  corresponds  to  Art.  377  of  the  German 
Commercial  Code. 

Article  289.  In  cases  arising  under  Art.  288,  the 
vendee,  even  though  he  terminates  the  contract, 
shall  safely  keep  or  deposit  the  subject-matter  of  the 
sale  at  the  expense  of  the  vendor.  But  where  the 
goods  are  in  danger  of  deterioration  or  loss,  he  shall 
sell  them  by  auction  with  the  permission  of  the  court 
and  shall  safely  keep  or  deposit  the  money  arising 
from  such  sale. 

When  the  vendee  has  sold  the  goods  by  auction  as 
mentioned  above,  he  shall  give  notice  thereof  to  the 
vendor  without  delay. 

In  case  the  seats  of  business,  or  if  there  are  no 
such  seats,  the  residences  of  the  vendor  and  vendee 
are  situated  in  the  same  shichosen,  the  provisions  of 
the  last  two  paragraphs  are  not  applicable. 

Corresponds  to  Art.  379  of  the  German  Commercial  Code. 

Article  290.  The  provisions  of  Art.  289  are  appli- 
cable to   cases  where  the  goods   delivered  by  the 


138  COMMERCIAL  CODE  OF  JAPAN. 

vendor  to  the  vendee  are  different  from  the  goods 
ordered.  If  the  amount  of  the  goods  delivered 
exceeds  that  of  the  goods  ordered,  the  same  rules  are 
applicable  to  the  excess  amount. 

Corresponds  to  Art.  378  of  the  German  Commercial  Code. 


SECTION  3.— CURRENT  ACCOUNTS. 

Article  291.  A  contract  of  current  account  is 
completed  when  two  traders  or  a  trader  and  a  non- 
trader  who  regularly  deal  with  each  other  agree  that 
the  whole  amount  of  the  debts  and  credits  arising 
from  their  dealings  within  a  certain  period  of  time 
shall  be  set  off  and  the  balance  paid. 

According  to  Art.  291  of  the  old  German  Commercial  Code 
both  parties  to  a  contract  of  current  account  must  be  traders. 
This  is  derived  from  Art.  355  of  the  present  German  Commer- 
cial Code. 

Article  292.  If  debts  and  credits  arising  from 
bills,  notes,  checks,  or  any  other  commercial  papers 
have  been  entered  in  a  current  account,  on  the 
default  in  payment  of  the  debtor  on  such  papers 
the  parties  may  exclude  the  item  relating  to  such 
debt  from  the  current  account. 

The  general  rule  is  that  any  item  entered  in  the  current 
account  cannot  be  freely  struck  out  by  the  parties,  irrespec- 
tive of  the  causa  on  which  an  obligation  is  based.  But  in  the 
present  article  the  law  provides  an  exceptional  rule  in  favor 
of  the  holder  of  a  commercial  paper  who  cannot  get  payment 
thereof  and  yet  who  is  liable  for  the  consideration  of  such 
paper  as  a  debt  entered  in  the  current  account   against  him. 


COMMERCIAL  TRANSACTIONS.  139 

Of  course,  he  may  seek  his  remedy  at  law;  but  it  is  more 
convenient  for  him  to  exclude  the  item  from  the  current 
account. 

Article  293.  When  the  parties  have  not  fixed  a 
period  at  the  end  of  which  a  set-off  is  to  take  place, 
such  period  shall  be  six  months. 

The  legal  period  is  based  on  the  commercial  usage  of 
Japan.  Art.  355,  par.  2,  of  the  German  Commercial  Code 
provides  that  the  settlement  of  account  is  made  once  a  year 
unless  there  is  an  agreement  to  the  contrary. 

Article  294.  After  the  parties  have  recognized 
an  account  which  contains  each  item  of  the  debts 
and  credits,  they  can  no  longer  object  to  any  item, 
except  in  the  case  of  error  or  omission. 

Article  295.  On  the  balance  arising  from  the 
set-off,  the  creditor  may  demand  legal  interest  from 
the  day  when  the  account  is  closed. 

A  right  to  claim  interest  on  each  item  from  the 
day  when  the  item  was  entered  in  the  current  account 
is  not  affected  by  this  provision. 

Derived  from  Art.  355,  par.  1,  of  the  German  Commercial 
Code. 

Article  296.  Each  party  may  terminate  the  con- 
tract of  current  account  at  any  time.  In  such  case 
the  party  may  instantly  close  the  account  and  de- 
mand the  balance. 

Derived  from  Art.  355,  par.  3,  of  the  German  Commercial 
Code. 


140  COMMERCIAL  CODE     OF  JAPAN. 

SECTION  4.— SOCIETE  TACITE. 

Article  297.  A  contract  of  sociite  tacite  is  com- 
pleted when  the  parties  agree  that  one  of  them 
[dormant  partner]  shall  make  a  contribution  for  the 
business  of  the  other  [proprietor]  and  share  any 
profits  arising  from  his  business. 

A  societe  tacite  is  only  a  contract  and  does  not  create  a 
juristic  person  though  it  resembles  a  societe  en  commandite. 
However,  it  differs  from  a  civil  partnership  under  the  Japanese 
Civil  Code .  The  latter  being  a  common  enterprise  of  all  the 
partners,  they  are  separately  liable  to  third  persons;  the 
former  being  the  business  of  the  proprietor,  but  not  of  the 
dormant  partner,  he  is  only  liable  to  the  proprietor  for  his 
contribution,  but  not  to  third  person,  for  the  debts  arising 
from  the  business. 

Under  the  German  Commercial  Code  societe  tacite  [stille- 
geselschaft]  is  a  section  of  the  book  on  companies,  and  not  a 
part  of  the  book  on  commercial  transactions  as  under  the 
present  Code. 

Article  298.  The  contribution  made  by  a  dormant 
partner  of  a  sociiti  tacite  becomes  the  property  of  the 
proprietor  of  the  business. 

The  dormant  partner  has  neither  rights  against 
nor  duties  in  favor  of  third  parties  in  regard  to  the 
transactions  of  the  proprietor. 

This  article  corresponds  to  Art.  335  of  the  German  Com- 
mercial Code. 

Article  299.  If  the  dormant  partner  has  allowed 
his  last  name  or  full  name  to  be  used  in  the  trade  name 
of  the  proprietor  or  his  own  trade  name  to  be  used 


COMMERCIAL  TRANSACTIONS.  141 

as  the  trade  name  of  the  proprietor,  he  is  jointly 
liable  with  him  for  the  debts  arising  after  such 
use. 

See  Arts.  65  and  116,  supra. 

Article  300.  The  dormant  partner  cannot  demand 
a  distribution  of  profits  unless  his  contribution,  when 
impaired  by  losses,  has  been  made  good. 

The  dormant  partner  is  under  no  obligation  to  contribute 
a  new  fund  to  make  up  the  losses.  This  article  simply  means 
that  when  his  contribution  is  impaired  by  losses,  he  is  not 
entitled  to  profits  unless  the  business  has  become  prosperous 
and  the  former  losses  have  been  thus  made  good. 

Article  301.  If  the  contract  of  societe  tacite  has 
failed  to  stipulate  for  the  period  of  the  duration  of 
the  societe  or  has  stipulated  that  it  shall  last  as  long 
as  the  life  of  one  of  the  parties,  either  party  may 
terminate  the  contract  at  the  end  of  a  business  year, 
but  a  notice  must  be  given  six  months  before  such 
termination. 

In  case  of  necessity,  either  party  may  terminate  the 
contract  at  any  time  irrespective  of  whether  the 
original  contract  has  or  has  not  stipulated  for  the 
period  of  the  duration  of  the  societe. 

This  article  is  derived  from  Art.  339  of  the  German  Com- 
mercial Code. 

Article  302.  The  contract  of  societe  tacite  is  ter- 
minated,— 

1.  When  the  enterprise  of  the  societe  is  accom- 
plished or  its  accomplishment  becomes  impossible; 


142  COMMERCIAL  CODE  OF  JAPAN. 

2.  On  the  death  or  incompetency  of  the  pro- 
prietor ; 

3.  On  the  bankruptcy  of  the  proprietor  or  the 
dormant  partner. 

See  Arts.  74  and  117,  supra. 

Article  303.  When  the  contract  of  soctiU  tacite 
is  terminated,  the  proprietor  shall  return  to  the 
dormant  partner  the  amount  of  his  contribution,1 
but  if  his  contribution  has  been  impaired  by  losses, 
it  is  sufficient  to  return  the  remaining  amount.2 

1  Even  if  the  property  of  the  societe  has  been  increased 
to  a  great  amount,  the  dormant  partner,  unlike  a  member 
of  a  societe  en  nom  collectif  or  a  societe  en  commandite  or  a 
partner  of  a  civil  partnership,  is  only  entitled  to  the  amount 
contributed.  However,  a  dormant  partner  being  a  creditor 
of  the  proprietor  may  compete  with  other  creditors,  though 
he  has  no  lien  on  the  amount  contributed  by  him. 

2  Derived  from  Art.  340,  pars.  1  and  3,  of  the  German 
Commercial  Code. 

Article  304.  The  provisions  of  Arts.  108,  111  and 
115  are  applicable  to  a  socUti  tacite. 

Corresponds  to  Arts.  335,  par.  1,  337  and  338  of  the  German 
Commercial  Code. 


SECTION  5.— BROKERAGE. 

Article  305.  A  broker  is  he  who  undertakes  as  a 
business  to  negotiate  commercial  transactions  be- 
tween other  persons  as  a  middleman. 

Art.  93,  par.  1,  of  the  German  Commercial  Code  provides 
that  any  person  who,  in  the  course  of  his  profession,  without 


COMMERCIAL  TRANSACTIONS.  143 

being  intrusted  to  do  so  by  a  specific  engagement,  or  per- 
manently, undertakes  as  an  intermediary  to  make  contracts 
of  buying  and  selling  of  goods  or  valuables,  of  insurance, 
transport  of  goods,  bottomry,  freight,  or  other  commercial 
transactions,  has  the  rights  and  duties  of  a  broker. 

Under  the  German  Commercial  Code,  brokerage  as  well 
as  commercial  agency  is  a  section  of  the  book  on  commerce 
in  general,  and  not  a  section  of  the  book  on  commercial 
transactions  as  under  the  present  Code. 

Article  306.  A  broker  in  a  transaction  negotiated 
by  him  is  not  authorized  to  receive  payment  or 
any  consignment  on  behalf  of  the  parties.  But 
this  provision  is  not  applicable  where  there  is  a 
different  manifestation  of  will  or  a  different  custom. 

In  other  words,  he  is  not  a  commercial  agent,  who  is  a  repre- 
sentative as  well  as  a  middleman. 

Corresponds  to  Art.   97  of  the  German  Commercial  Code. 

Article  307.  When  a  broker  has  received  a  sample 
in  a  transaction  negotiated  by  him,  he  shall  keep  it 
until  the  transaction  is  completed. 

Art.  96  of  the  German  Commercial  Code  reads  as  follows: — 
"The  broker,  if  the  parties  have  not  excused,  nor  local 
custom  with  reference  to  the  description  of  goods  has  not 
exempted  him,  must  keep  samples  of  all  goods  sold  by  him 
by  sample,  when  any  have  been  sent  him,  until  they  have 
been  accepted  without  objection  to  their  quality,  or  the 
transaction  is  closed  in  any  other  way.  He  must  make 
the  sample  recognizable  by  a  distinctive  label." 

Article  308.  As  soon  as  a  transaction  has  been 
concluded  between  the  parties,  the  broker  must 
make  memoranda  containing  the  names  or  trade 
names  of  the  parties,  the  date  of  the  transaction  and 


144  COMMERCIAL  CODE  OF  JAPAN. 

a  summary  of  its  character,  and  after  signing  the 
memoranda,  must  deliver  one  to  each  party. 

Except  where  the  parties  are  to  perform  the  con- 
tract directly,  the  broker  must  require  each  party 
to  sign  a  memorandum  and  then  must  deliver  the 
memorandum  so  signed  to  the  other  party. 

If  one  of  the  parties  does  not  accept  or  sign  the 
memorandum,  the  broker  must  instantly  give  notice 
to  the  other  party. 

This  article  is  identical  with  Art.  94  of  the  German  Commer- 
cial Code. 

Article  309.  The  broker  shall  enter  the  particu- 
lars mentioned  in  Art.   308  in  his  account  books. 

The  parties  may  at  any  time  demand  from  the 
broker  a  copy  of  the  account  relating  to  the  trans- 
action negotiated  for  them. 

This  article  corresponds  to  Arts.  100  and  101  of  the 
German  Commercial  Code. 

Article  310.  If  one  of  the  parties  has  ordered  the 
broker  not  to  disclose  his  name  or  trade  name  to  the 
other  party,  the  broker  shall  not  enter  his  name  or 
trade  name  in  the  memoranda  mentioned  in  Art. 
308,  par.  1,  and  the  copy  mentioned  in  Art.  309, 
par.  2. 

Article  311.  When  the  broker  has  not  disclosed 
the  name  or  trade  name  of  one  party  to  the  other, 
he  himself  is  responsible  to  the  other  for  the  per- 
formance of  the  contract. 

Corresponds  to  Art.  95,  pars.  1  and  3,  of  the  German  Com- 
mercial Code. 


COMMERCIAL  TRANSACTIONS.  14& 

Article  312.  The  broker  cannot  demand  com- 
pensation unless  the  procedure  mentioned  in  Art. 
308  has  been  finished. 

Each  party  is  equally  liable  for  the  broker's  com- 
pensation. 

Art.  99  of  the  German  Commercial  Code  provides  that  if 
it  is  not  agreed  between  the  parties  who  is  to  pay  brokerage, 
half  is  payable  by  each  party  in  the  absence  of  local  custom 
to  the  contrary. 

SECTION  6.— COMMISSION  MERCHANTS. 

Article  313.  A  commission  merchant  is  he  who 
undertakes  as  a  business  to  sell  or  buy  goods1  in 
his  own  name2  on  account  of  other  persons.3 

1  It  is  construed  that  securities  must  be  included  in  the 
word  "goods."  Art.  383  of  the  German  Commercial  Code 
provides  that  a  commission  merchant  is  he  who  undertakes 
as  his  profession  to  buy  or  sell  goods  or  paper  securities  in  his 
own  name  on  account  of  a  third  person. 

2  Thus,  he  acquires  rights  and  assumes  duties  arising  from 
the  transaction.  In  this  point  he  is  different  from  a  com- 
mercial agent,  who  sells  and  buys  in  the  name  of  his  principal. 

3  Art.  387  of  the  German  Commercial  Code  provides  that 
if  a  commission  merchant  brings  a  transaction  to  a  more 
successful  termination  than  was  imposed  on  him  by  the 
principal,  the  latter  takes  all  benefit. 

A  broker  on  the  exchange  is  not  a  broker  as  denned  in 
Art.  305,  but  a  commission  merchant  within  the  meaning 
of  the  present  section,  since  his  business  is  to  sell  or  buy  goods 
or  securities  in  his  own  name  on  account  of  other  persons. 
Indeed,  a  broker  on  the  exchange  may  buy  or  sell  goods  on 
his  own  account;  however,  this  is  not  his  principal  business. 
Therefore,  the  present  section  is  applicable  to  a  broker  on 
the  exchange  except  where  there  are  special  provisions  in 
the  Exchange  Act. 


,146  COMMERCIAL  CODE  OF  JAPAN. 

Article  314.  By  selling  or  buying  on  account  of 
another,  the  commission  merchant  himself  acquires 
rights  against  and  assumes  duties  in  favor  of  the 
other  party. 

As  between  the  commission  merchant  and  his 
principal,  beside  the  provisions  of  this  section,  the 
provisions  for  attorneyship  and  agency  are  appli- 
cable. 

Art.  392  of  the  German  Commercial  Code  provides  that 
claims  arising  out  of  business  done  by  a  commission 
merchant  can  only  be  sustained  against  debtors  by  a  principal 
when  they  have  been  transferred  to  him  by  the  commission 
merchant.  Nevertheless,  such  claims,  even  without  being 
transferred,  are  to  be  considered  as  claims  of  the  principal  in 
his  relations  with  the  commission  merchant  or  with  the 
latter's  creditors. 

Article  315.  The  commission  merchant  is  him- 
self responsible  to  his  principal  for  the  debt  arising 
from  selling  or  buying  on  account  of  the  latter,  if 
the  other  party  to  the  transaction  fails  to  perform 
the  contract.  But  this  provision  is  not  applicable 
where  there  is  a  different  manifestation  of  will  or  a 
different  custom. 

Since  the  principal  cannot  bring  an  action  directly  against 
the  other  party,  the  law  imposes  on  the  commission  merchant 
the  liability  of  a  guarantor. 

Art.  394,  par.  1,  of  the  German  Commercial  Code  provides 
that  a  commission  merchant  is  answerable  for  the  carrying 
out  of  a  contract  by  a  third  person  with  whom  he  has  con- 
cluded the  transaction  on  account  of  his  principal,  if  he  has 
undertaken  this  responsibility  or  it  was  the  trade  custom 
in  the  place  when  it  was  made. 


COMMERCIAL  TRANSACTIONS.  147 

Article  316.  In  case  a  commission  merchant  has 
sold  goods  for  a  lower  price  or  bought  them  for  a 
higher  price  than  that  fixed  by  his  principal,  if  the 
commission  merchant  bears  the  difference,  such  sell- 
ing or  buying  is  valid  against  the  principal. 

Corresponds  to  Art.  386,  par.  2,  of  the  German  Commercial 
Code. 

Article  317.  A  commission  merchant  may  make 
himself  a  vendor  or  vendee  of  the  goods  which  he 
is  to  buy  or  to  sell  for  his  principal,  if  such  goods  are 
quoted  on  the  exchange.  In  such  cases  the  price 
is  determined  by  the  quotation  on  the  exchange  at 
the  time  when  he  notifies  the  principal  that  he 
becomes  the  vendor  or  vendee.1 

Even  in  such  case,  the  commission  merchant  may 
demand  compensation  from  his  principal.2 

1  This  is  an  exception  to  the  general  principle  of  the  Civil 
Code  that  a  party  cannot  be  an  agent  for  both  parties  in  the 
same  juristic  act.  See  Art.  108  of  the  Civil  Code.  Since  the 
goods  have  a  market  value  on  the  exchange,  it  is  impossible 
for  the  commission  merchant  to  commit  a  fraud  to  the  preju- 
dice of  his  principal. 

Derived  from  Art.  400,  pars.  1,  2  and  3,  of  the  German 
Commercial  Code. 

2  Corresponds  to  Art.  403  of  the  German  Commercial  Code. 

Article  318.  The  provisions  of  Art.  286  are  appli- 
cable where  a  principal  refuses  or  is  unable  to  accept 
the  goods  bought  by  a  commission  merchant  in 
pursuance  of  the  order  of  the  principal. 

Corresponds  to  Arts.  388,  389  of  the  German  Commercial 
Code. 


148  COMMERCIAL  CODE  OF  JAPAN. 

Article  319.  The  provisions  of  Arts.  37  and  41 
are  applicable  to  a  commission  merchant. 

Corresponds  to  Arts.  384,  par.  2,  and  397  of  the  German 
Commercial  Code. 

Article  320.  The  provisions  of  this  section  are 
applicable  to  those  who  enter  into  transactions  other 
than  selling  or  buying  in  their  own  names  on  account 
of  other  persons. 

For  instance,  a  person  undertakes  an  advertising  business 
in  his  own  name  on  account  of  other  persons.  Such  person 
is  called  a  quasi  commission  merchant. 

Derived  from  Art.  406,  par.  1,  of  the  German  Commercial 
Code. 

SECTION  7.— FORWARDING  AGENTS. 

Article  321.  A  forwarding  agent  is  he  who  under- 
takes as  a  business  to  forward  goods  in  his  own  name 
[on  account  of  other  persons]. 

The  provisions  concerning  commission  merchants 
are  applicable  to  forwarding  agents  unless  there  are 
special  provisions  in  this  section. 

This  article  corresponds  to  Art.  407  of  the  German  Com- 
mercial Code. 

Article  322.  A  forwarding  agent  cannot  be  ex- 
empted from  liability  for  loss,  injury,  or  delay  of  the 
goods,  unless  he  proves  that  he  and  his  employees 
have  not  failed  to  use  due  care  in  receiving,  deliver- 
ing and  safe-keeping  the  goods,  in  choosing  carriers 
or  other  forwarding  agents,  and  in  other  matters 
relating  to  the  carriage  of  the  goods. 


COMMERCIAL  TRANSACTIONS.  149 

Art.  408,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"A  forwarding  agent  is  bound  to  bring  to  bear  the  care  of  a 
good  business  man  in  effecting  the  transport,  especially  in 
choosing  carriers,  shipowners,  and  intermediary  forwarding 
agents;  he  must  take  care  of  the  interests  of  the  sender  and 
obey  his  instructions." 

Article  323.  A  forwarding  agent  may  demand 
compensation  as  soon  as  the  goods  have  been  deliv- 
ered to  the  carrier.1 

When  the  amount  of  freight  has  been  fixed  by 
the  forwarding  contract,  the  agent  cannot  demand 
an  extra  compensation  unless  there  is  a  special  agree- 
ment.2 

1  Identical  with  Art.  409  of  the  German  Commercial  Code. 

2  Because  in  such  case  a  compensation  is  usually  included 
in  the  amount  of  freight  fixed. 

Identical  with  Art.  413,  pars.  1  and  2,  of  the  German 
Commercial  Code. 

Article  324.  A  forwarding  agent  may  retain  the 
goods  only  for  the  debts  which  are  connected  with 
such  goods,  such  as  the  compensation,  freight,  and 
any  other  advance  made  for  his  principal. 

Thus,  his  right  of  retaining  goods  is  the  same  as  that  of 
a  common  carrier,  but  differs  from  that  of  a  commercial  agent, 
a  commission  merchant,  or  similar  rights  between  traders. 
The  sphere  of  the  former  is  much  narrower  than  that  of  the 
latter. 

Art.  410  of  the  German  Commercial  Code  provides  that  the 
forwarding  agent  possesses  a  right  of  lien  over  goods,  for  the 
price  of  transport,  commission  and  out-of-pocket  expenses 
for  advances  made  for  the  goods  to  the  extent  that  they  are 


150  COMMERCIAL  CODE  OF  JAPAN. 

in  his  possession  or  that  he  can  dispose  of  them  by  means 
of  bills  of  lading,  freight  and  warrants. 

Article  325.  In  case  several  agents  are  succes- 
sively employed  in  forwarding  the  goods,  each  suc- 
ceeding agent  is  obliged  to  exercise  the  rights  of  his 
predecessor. 

In  such  cases,  the  successor  having  made  payment 
to  the  predecessor  acquires  the  rights  of  the  latter. 

For  instance,  when  the  first  forwarding  agent  desires  to 
exercise  his  right  of  lien  on  the  goods  which  are  in  the  hands 
of  the  second  forwarding  agent,  the  latter  must  retain  such 
goods  for  the  former.  If  the  second  agent  pays  the  debt  due 
to  the  first  agent  by  the  principal,  the  right  of  lien  is  trans- 
ferred to  the  second  agent. 

This  article  is  derived  from  Art.  411,  pars.  1  and  2,  of  the 
German  Commercial  Code. 

Article  326.  A  forwarding  agent  having  made 
payment  to  the  carrier  acquires  the  rights  of  the 
latter. 

For  instance,  the  right  of  lien  belonging  to  a  carrier  is 
transferred  to  the  second  forwarding  agent,  if  he  pays  the 
debt  due  to  the  carrier  by  the  first  agent. 

Derived  from  Art.  411,  par.  3,  of  the  German  Commercial 
Code. 

Article  327.  A  forwarding  agent  may  make  him- 
self a  carrier  unless  there  is  a  special  agreement. 
In  such  case,  the  forwarding  agent  has  the  same 
rights  and  duties  as  a  carrier. 

Identical  with  Art.  412  of  the  German  Commercial  Code. 


COMMERCIAL  TRANSACTIONS.  151 

Article  328.  The  responsibility  of  a  forwarding 
agent  is  extinguished  by  prescription  when  one  year 
has  elapsed  since  the  consignee  received  the  goods. 

In  case  the  goods  are  totally  lost,  the  time  men- 
tioned above  begins  to  run  from  the  day  when  he 
should  have  delivered  the  goods. 

The  provisions  of  the  last  two  paragraphs  are  not 
applicable  where  the  forwarding  agent  has  acted  in 
bad  faith. 

This  article  is  identical  with  Art.  414,  pars.  1,  3  and  6,  of 
the  German  Commercial  Code. 

Article  329.  Any  claim  of  a  forwarding  agent 
against  the  principal  or  consignee  is  barred  by  pre- 
scription after  one  year  has  elapsed. 

Article  330.     The  provisions  of  Arts.  338  and  343 

are  applicable  to  a  forwarding  agent. 


SECTION  8.— COMMON  CARRIERS. 

Article  331.  A  common  carrier  is  he  who  under- 
takes as  a  business  to  carry  goods  or  passengers  by 
land,  rivers,  lakes,  harbors,  or  bays. 

Art.  425  of  the  German  Commercial  Code  provides  that  a 
carrier  is  he  who,  as  a  business,  undertakes  to  bring  about 
the  carriage  of  goods  by  land,  river,  or  inland  water  courses. 
But  in  Germany  there  is  a  statute  as  to  carriage  by  river 
or  inland  water  courses. 

"Carriage  by  railway"  is  an  independent  section  under  the 
German  Commercial  Code.  In  Japan  there  are  several 
statutes  and  ordinances  in  regard  to  railways,  but  no  such 
section  in  the  Commercial  Code.     The  present  section  is  also 


152  COMMERCIAL  CODE  OF  JAPAN. 

applicable  to  a  railway  company,  in  the  absence  of  special 
provisions  in  statutes  and  ordinances. 

Carriage  by  sea  is  excluded  from  the  present  section,  since 
it  is  the  subject  of  the  fifth  book  of  the  Code.  The  scope  of 
the  said  "lakes,  rivers,  harbors  and  bays"  is  fixed  by  the 
minister  of  communication.  See  Art.  122  of  the  Code  for  the 
Carrying  Out  of  the  Commercial  Code  and  the  ordinances  of 
the  Department  of  Communication. 


Sub-Section  1.— Carriage  of  Goods. 

Article  332.  On  the  application  of  the  common 
carrier,  the  consignor  of  the  goods  shall  furnish  him 
with  an  invoice.1 

An  invoice  shall  contain  the  following  particulars 
with  the  signature  of  the  consignor:2 — 

1 .  The  nature  of  the  goods,  their  weight  or  bulk, 
and  the  nature  of  the  packages,  their  number  and 
marks. 

2.  The  destination  of  the  goods. 

3.  The  name  or  trade  name  of  the  consignee. 

4.  The  place  where  the  invoice  is  made,  and  the 
date  on  which  it  is  made. 

1  The  purpose  of  the  invoice  is  to  give  the  consignee  a 
chance  to  know  the  nature  of  the  carriage  contract. 

2  According  to  Art.  426  of  the  German  Commercial  Code, 
an  invoice,  besides  the  particulars  mentioned  in  this  article, 
must  contain  the  name  and  address  of  the  carrier;  the  de- 
scription of  the  papers  which  must  accompany  the  goods 
for  the  purposes  of  custom  house,  taxing  office  and  police 
examination;  provisions  made  for  the  rate  of  carriage,  and 
if  the  latter  has  been  paid  in  advance,  a  note  of  such  payment; 
and  any  special  agreements  made  on  other  points,  especially 
regarding  the  time  in  which  the  transport  is  to  be  effected, 


COMMERCIAL  TRANSACTIONS.  153 

regarding  the  damages  payable  in  the  case  of  late  delivery 
and  the  repayment  of  expenses  due  on  the  goods. 

Article  333.  On  the  application  of  the  consignor, 
the  common  carrier  shall  furnish  him  with  a  way- 
bill.1 

A  way-bill  shall  contain  the  following  particulars 
with  the  signature  of  the  common  carrier:2 — 

1.  Those  mentioned  in  Art.  332,  par.  2,  Nos.  1-3. 

2.  The  name  or  trade  name  of  the  consignor. 

3.  The  freight. 

4.  The  place  where  the  way-bill  is  made  and  the 
date  on  which  it  is  made. 

1  A  way-bill  is  a  receipt  for  goods ;  it  is  identical  with  a  bill 
of  lading  in  marine  commerce. 

2  A  way-bill  is  a  negotiable  instrument.  The  rights  and 
duties  of  the  parties  are  determined  only  by  the  wording 
of  the  instrument.  A  valid  way-bill  must  contain  all  the 
particulars  mentioned  in  this  article  without  a  single  omission. 

This  article  is  identical  with  Arts.  444  and  445  of  the 
German  Commercial  Code,  except  that  a  way-bill  under  the 
German  Code  must  contain  the  name  and  address  of  the 
carrier  and  the  provisions  relating  to  the  price  of  transport 
and  sums  to  be  deducted  from  the  goods,  as  well  as,  in  the 
case  of  paying  the  cost  of  transport  in  advance,  a  memoran- 
dum noting  such  payment. 

Article  334.  When  a  way-bill  has  been  made,  the 
relationship  between  the  common  carrier  and  the 
holder  of  the  bill  in  regard  to  the  business  of  car- 
riage is  governed  by  the  terms  of  the  way-bill. 

Art.  446  of  the  German  Commercial  Code  reads  as  follows : — 
"The    way-bill    regulates     the    relationship    between     the 


154  COMMERCIAL  CODE  OF  JAPAN. 

carrier  and  the  consignee;  the  provisions  of  the  contract  of 
transport  not  set  out  in  the  way-bill  have  no  effect  as  regards 
the  consignee,  unless  such  way-bill  expressly  refers  to  it. 
The  relationship  between  the  carrier  and  the  sender  is  regu- 
lated by  the  contract  of  transport." 

Article  335.  The  assignment  of  a  way-bill  by 
indorsement  has  the  same  effect  as  the  assignment 
of  the  goods. 

Corresponds  to  Art.  450  of  the  German  Commercial  Code. 

Article  336.  When  the  whole  or  part  of  the  goods 
are  destroyed  by  circumstances  beyond  the  control 
of  the  parties,  the  common  carrier  cannot  in  so  far 
as  the  goods  have  been  destroyed  demand  the  freight. 
If  he  has  received  the  whole  or  part  of  the  freight, 
he  shall  return  it. 

When  the  whole  or  part  of  the  goods  are  destroyed 
by  reason  of  their  nature  or  defects  or  by  the  fault 
of  the  consignor,  the  common  carrier  may  demand 
the  whole  amount  of  the  freight. 

Article  337.  A  common  carrier  cannot  be  ex- 
empted from  liability  for  loss,  injury  or  delay  of  the 
goods  unless  he  proves  that  he  himself,  the  forward- 
ing agent,1  their  employees  and  any  other  persons 
occasionally  employed  for  the  carriage  of  the  goods 
have  not  failed  to  use  due  care  in  receiving,  deliver- 
ing, safe-keeping,  and  carrying  the  goods.2 

1  A  common  carrier  may  be  responsible  for  the  act  of  a 
forwarding  agent,  in  case  they  are  jointly  liable  under  Art. 
339  infra. 


COMMERCIAL  TRANSACTIONS.  135" 

2  Art.  429,  par.  1,  of  the  German  Commercial  Code  provides 
that  a  carrier  is  responsible  for  damage  for  loss  or  deterioration 
in  value  to  goods  from  the  moment  he  receives  them  till  the 
time  they  are  delivered,  as  well  as  for  delay  in  delivery,  unless 
such  loss,  deterioration,  or  delay  result  from  circumstances 
which  the  precaution  of  a  careful  carrier  could  not  avoid. 

Art.  431  of  the  same  Code  provides  that  a  carrier  is 
responsible  for  an  offence  commit ed  by  his  own  servants  or 
by  other  persons  whom  he  may  use  to  effect  the  carriage,  to 
the  same  extent  as  if  it  were  his  own  personal  fault. 

Article  338.  A  common  carrier  is  not  liable  for 
damage  for  loss  or  injury  to  money,  securities,  or 
any  other  valuable  property  unless  the  consignor 
made  a  clear  declaration  of  their  nature  and  value 
when  he  applied  for  their  carriage. 

Identical  with  Art.  429,  par.  2,  of  the  German  Commercial 
Code. 

Article  339.  In  case  several  carriers  are  succes- 
sively employed'  in  carriage,  they  are  jointly  liable 
for  the  loss,  injury  or  delay  of  the  goods. 

Art.  432  of  the  German  Commercial  Code  reads  as 
follows  :— 

"When  a  carrier  has  sent  to  another  carrier  goods  whose 
transport  he  has  undertaken  to  effect,  so  that  the  latter  may 
continue  such  transport,  the  first  carrier  is  responsible  for 
the  carriage  till  delivery  to  the  consignee. 

"The  second  carrier,  by  the  sole  fact  of  his  taking  over  the 
goods  and  original  invoice,  accepts  the  conditions  of  the  said 
invoice ;  he  undertakes  the  personal  responsibility  of  effecting 
the  carriage  according  to  such  conditions. 

"If  one  of  the  interested  carriers  paid  indemnity  by  virtue 
of  the  preceding  enactments,  he  has  a  right  of  action  against 
the  author  of  such  damage. 


156  COMMERCIAL  CODE  OF  JAPAN. 

"If  the  author  of  such  damage  cannot  be  discovered,  each 
of  the  carriers  is  bound  to  share  in  paying  for  the  damage 
in  proportion  to  his  share  of  the  carriage,  unless  he  can  show 
that  such  damage  was  not  done  during  such  part  of  the 
carriage  as  was  effected  by  him." 

Article  340.  When  the  goods  are  totally  lost,  the 
measure  of  damage  is  determined  by  the  value  at 
the  destination  of  the  goods  on  the  day  when  the 
goods  should  have  been  delivered. 

In  case  the  goods  are  partially  destroyed  or  injured, 
the  measure  of  damage  is  determined  by  the  value 
at  the  destination  of  the  goods  on  the  day  when 
the  goods  were  delivered.  But  in  case  of  delay,  the 
provisions  of  the  previous  paragraph  are  applicable. 

The  freight  or  other  expenses  which  need  not 
be  paid  on  account  of  the  loss  or  injury  of  the  goods 
may  be  deducted  from  the  amount  of  damages  men- 
tioned in  the  previous  paragraphs. 

Art.  430  of  the  German  Commercial  Code  reads  as 
follows : — 

"When  the  contract  stipulates  that  the  carrier  owes  an 
indemnity  for  the  total  or  partial  loss  of  the  goods,  such  in- 
demnity will  amount  to  the  current  trade  value,  or,  in  default 
of  a  current  trade  value,  to  the  current  value  of  goods  of  the 
same  kind  and  the  same  nature  in  the  locality  and  at  the  time 
delivery  ought  to  have  been  made;  a  deduction  must  be 
made  of  what  is  saved  on  account  of  such  loss  in  custom 
duty  and  other  costs  as  well  as  charges  for  carriage. 

"In  case  of  damage  the  indemnity  will  consist  of  the 
differences  between  the  selling  value  of  the  goods  in  their 
damaged  condition  and  their  current  trade  value  or  the 
current  value  of  goods  of  the  same  kind  and  nature  in  the 
locality  and  at  the  time  agreed  upon  for  delivering  them; 


COMMERCIAL  TRANSACTIONS.  1&7  - 

a  deduction  may  be  made  of  the  saving  effected  upon  custom 
house  duty  and  other  costs  as  well  as  charges  for  carriage. 

"When  damage  results  from  the  fraud  or  pure  negligence 
of  the  carrier  compensation  for  the  whole  damage  may  be 
demanded  from  him. 

Article  341.  When  the  goods  are  destroyed  or 
injured  through  the  malicious  intent  or  gross  negli- 
gence of  the  common  carrier,  he  is  responsible  for 
full  damages. 

Derived  from  Art.  430,  par.  3,  of  the  German  Commercial 
Code,  supra. 

Article  342.  The  consignor  or  the  holder  of  a 
way-bill  may  require  the  common  carrier  to  stop 
the  carriage,  to  return  the  goods,  or  to  make  any 
other  disposition  of  them.  In  such  case,  the  common 
carrier  may  demand  payment  for  the  freight  in 
proportion  to  the  service  already  performed,  for  the 
advance  made  by  him,  or  for  any  other  expenses 
arising  from  such  disposition. 

The  right  of  the  consignor  mentioned  in  the  pre- 
vious paragraph  is  extinguished  as  soon  as  the 
consignee  demands  the  delivery  of  the  goods  after 
they  arrive  at  their  destination. 

Art.  433  of  the  German  Commercial  Code  reads  as  follows: — 
"The  sender  may  order  the  carrier  to  hold  the  goods,  or 
return  them,  or  deliver  them  to  another  consignee  than  the 
one  indicated  in  the  invoice.     Any  additional  expense  result- 
ing from  such  orders  must  be  paid  to  the  carrier. 

"The  right  of  the  sender  over  the  goods  is  lost  when,  after 
the  arrival  of  the  goods  at  the  place  they  are  to  be  delivered, 
the  invoice  is  sent  to  the  consignee,  or,  if  the  latter,  in  con- 


158  COMMERCIAL  CODE  OF    JAPAN. 

formity  with  Art.  435  brings  an  action  against  the  carrier. 
In  such  case,  the  carrier  must  only  follow  the  instructions 
of  the  consignee  and  is  responsible  for  the  goods  to  the  latter." 
Art.  428,  par.  2,  of  the  same  Code  reads  as  follows: — 
"If  the  starting  or  continuation  of  the  journey  is  tem- 
porarily hindered  through  no  fault  on  the  part  of  the  sender, 
the  latter  may  withdraw  from  the  contract;  he  is,  however, 
bound,  if  the  carrier  is  not  to  blame,  to  indemnify  him  for 
the  expense  of  preparing  for  the  journey,  of  re-unloading 
and  of  the  portion  of  the  journey  already  accomplished. 
The  amount  of  the  indemnity  is  regulated  by  local  custom; 
in  default  of  local  custom  an  indemnity  according  to  the 
circumstances  will  be  allowed." 

Article  343.  As  soon  as  the  goods  arrive  at  their 
destination,  the  consignee  acquires  the  rights  of  the 
consignor.1 

When  the  consignee  accepts  the  goods,  he  is 
obliged  to  pay  the  freight  or  any  other  expenses  to 
the  common  carrier.2 

1  The  expression  that  "the  consignee  acquires  the  rights  of 
the  consignor"  does  not  mean  that  the  rights  of  the  consignor 
are  transferred  to  the  consignee;  for  after  the  goods  have 
arrived  and  before  the  consignee  has  demanded  their  de- 
livery the  consignor  still  has  a  right  to  stop  the  carriage,  to 
return  the  goods  or  to  make  any  other  disposition  of  them 
under  Art.  342.  The  present  provision  is  really  a  corrupted 
form  of  Art.  435  of  the  German  Commercial  Code  which  reads 
as  follows: — 

"After  the  arrival  of  the  goods  at  the  place  of  their  destina- 
tion, the  consignee  may  maintain  in  his  own  name  against 
the  carrier,  either  in  his  own  interest  or  in  that  of  a  third 
party,  any  rights  arising  from  the  contract  of  carriage,  on 
condition  that  he  himself  has  fulfilled  all  its  conditions. 

"He  is  especially  entitled  to  ask  the  carrier  to  hand  over 
the  invoice  and  to  deliver  the  goods." 


COMMERCIAL  TRANSACTIONS.  159 

"This  right  is  lost  when  the  sender  has  given  instructions 
to  the  carrier  contrary  to  those  permitted  by  Art.  433." 
[See  notes  to  Art.  342,  supra.] 

2  Art.  436  of  the  German  Commercial  Code  provides  that  by 
accepting  the  goods  and  the  invoice,  the  consignee  is  bound  to 
pay  the  carrier  in  accordance  with  the  terms  of  such  invoice. 

Article  344.  In  case  a  way-bill  has  been  made, 
delivery  of  the  goods  cannot  be  demanded  unless  the 
bill  is  surrendered. 

Corresponds  to  Art.  448  of  the  German  Commercial  Code. 

Article  345.  If  the  consignee  cannot  be  found, 
the  common  carrier  may  deposit  the  goods. 

In  such  case,  if  the  consignor  fails  to  give  orders 
to  the  carrier  in  regard  to  the  disposition  of  the  goods 
after  the  carrier  has  fixed  a  reasonable  time  and 
notified  the  consignor  to  give  such  orders  within 
that  time,  the  carrier  may  sell  the  goods  by  auction. 

As  soon  as  the  carrier  has  deposited  or  sold  the 
goods  as  mentioned  above,  he  shall  give  notice  to  the 
consignor. 

Art.  437  of  the  German  Commercial  Code  reads  as  follows : — 
"If  the  consignee  of  the  goods  cannot  be  found  or  refuses 
delivery,  or  if  there  is  any  obstacle  to  delivery,  the  carrier 
ought  immediately  to  notify  the  sender  and  take  his  orders. 
"If  this,  however,  cannot  be  done  owing  to  circumstances, 
or  if  the  sender  has  delayed  in  giving  his  instructions,  or  if 
the  order  given  cannot  be  executed,  the  carrier  has  the  right 
to  send  the  goods  to  a  public  warehouse  or  deposit  them  in 
any  other  place  equally  secure.  He  can,  when  the  goods  are 
liable  to  deteriorate  by  keeping,  or  if  there  is  danger  in 
delaying,  have  them  sold  in  conformity  with  pars.  2  and  4  of 
Art.  373. 


160  COMMERCIAL  CODE  OF  JAPAN. 

1  When  such  consigning  or  sale  has  taken  place,  the  carrier 
ought  to  immediately  give  notice  to  the  sender  and  consignee 
unless  such  a  thing  is  impossible.  If  he  omits  to  do  so,  he 
is  answerable  in  damages." 

Article  346.  The  provisions  of  Art.  345  are  appli- 
cable where  the  consignee  refuses  to  accept  the 
goods. 

When  the  common  carrier  is  about  to  sell  the 
goods  by  auction  he  shall  fix  a  reasonable  time  and 
notify  the  consignee  to  accept  the  goods  within  that 
time,  after  which  time  he  shall  then  give  the  notifi- 
cation to  the  consignor  as  mentioned  in  Art.  345, 
par.  2. 

In  such  case,  the  carrier  must  also  give  notice  of 
the  deposit  or  auction  to  the  consignee  without 
delay. 

See  notes  to  Art.  345,  supra. 

Article  347.  The  provisions  of  Art.  286,  pars.  2 
and  3,  are  applicable  to  the  cases  mentioned  in  Arts. 
345  and  346. 

See  notes  to  Art.  345,  supra. 

Article  348.  The  responsibility  of  a  common 
carrier  is  extinguished  when  the  consignee  accepts 
the  goods  without  condition  and  pays  the  freight 
and  other  expenses.  But  this  rule  is  not  applicable 
when,  in  the  case  of  injury  or  partial  loss  which 
cannot  be  discovered  at  once,  notice  thereof  is  given 
to  the  carrier  within  two  weeks  from  the  day  of 
delivery. 


COMMERCIAL  TRANSACTIONS.  1QV 

These  provisions  are  not  applicable  when  the 
carrier  has  acted  in  bad  faith. 

This  article  is  derived  from  Art.  438  of  the  German  Com- 
mercial Code. 

Article  349.  The  provisions  of  Arts.  324,  325,  328 
and  329,  are  applicable  to  a  common  carrier. 

Except  in  the  case  of  Art.  329,  this  article  is  derived  from 
Arts.  440,  441,  442  and  439  of  the  German  Commercial  Code. 

Sub-Section  2. — Carriage  of  Passengers. 

Article  350.  A  carrier  of  passengers  cannot  be 
exempted  from  liability  for  any  injury  suffered  by  a 
passenger  through  the  carriage  unless  he  proves 
that  he  and  his  employees  have  not  failed  to  use  due 
care  in  the  carriage. 

In  determining  the  measure  of  damages  the  court 
must  take  into  consideration  the  circumstances 
of  the  party  injured  and  of  the  members  of  his 
family. 

There  is  no  separate  section  for  carriage  of  persons  in  the 
German  Commercial  Code,  except  that  Art.  472  of  that  Code 
provides  that  provisions  relating  to  the  transport  of  persons 
effected  by  railways  are  determined  by  the  regulations  affect- 
ing railway  traffic. 

Article  351.  A  carrier  of  passengers  is  responsible 
as  a  carrier  of  goods  for  the  baggage  which  has  been 
delivered  to  him  by  a  passenger,  even  though  a 
separate  freight  is  not  charged. 

The  provisions  of  Art.  286  are  applicable  where 
the  passenger  does  not  demand  the  delivery  of  the 


162  COMMERCIAL  CODE  OF  JAPAN. 

baggage  within  one  week  from  the  day  when  it 
arrives  at  its  destination,  but  it  is  unnecessary  to 
give  a  notification  or  notice  to  a  passenger  whose 
residence  or  tefnporary  residence  is  unknown. 

Article  352.  If  a  passenger's  baggage  has  not 
been  delivered  to  the  carrier,  the  carrier  is  not 
responsible  for  its  injury  or  loss,  unless  he  or  his 
employees  have  committed  a  fault. 

SECTION  9.— DEPOSIT. 

Sub- Section  1. — General  Provisions. 

Article  353.  When  a  trader  receives  a  deposit  in 
the  course  of  his  business,  he  shall  use  the  due  care 
of  a  good  manager  even  though  he  receives  no  com- 
pensation. 

The  provisions  of  Arts.  353-356  are  special  provisions  for 
a  trader  who  in  the  course  of  his  business  receives  things  for 
safekeeping.  Perhaps  it  is  improper  to  call  them  general 
provisions  for  deposit,  since  they  are  in  no  way  connected 
with  the  warehousing  business.  There  are  no  such  provisions 
in  the  German  Commercial  Code. 

Article  354.  A  proprietor  of  a  hotel,  restaurant, 
bath,  or  any  other  place  for  the  purpose  of  enter- 
taining guests  cannot  be  exempted  from  liability 
for  the  loss  or  injury  of  the  things  which  the  guests 
have  deposited  with  him,  unless  he  proves  that  such 
things  have  been  lost  or  injured  by  unavoidable  cir- 
cumstances. 

When  things  are  lost  or  injured  which  a  guest  has 
brought  w^ith  him,  even  though  they  have  not  been 


COMMERCIAL  TRANSACTIONS.  '  163 

deposited  with  the  proprietor,  he  is  liable  if  they 
have  been  lost  or  injured  through  the  negligence  of 
himself  or  his  employees. 

The  proprietor  cannot  be  exempted  from  liability 
by  a  notice  that  he  will  not  be  responsible  for 
things  brought  by  the  guests. 

Article  355.  The  proprietor  is  not  responsible 
for  the  loss  of  or  injury  to  money,  securities  or  any 
other  valuable  property  unless  the  guest  has  de- 
posited them  with  the  proprietor  with  a  clear  declara- 
tion of  their  nature  and  value. 

Article  356.  The  liability  mentioned  in  Arts.  354 
and  355  is  extinguished  by  prescription  when  one 
year  has  elapsed  since  the  proprietor  returned  the 
things  deposited  or  the  guest  took  away  the  things 
which  he  had  brought. 

If  the  things  are  totally  lost,  the  period  of  time 
mentioned  in  the  last  paragraph  begins  to  run  from 
the  time  when  the  guest  leaves  the  place. 

The  provisions  of  the  last  two  paragraphs  are  not 
applicable  where  the  proprietor  has  acted  in  bad 
faith. 

Sub-Section  2. — Warehousing. 

Article  357.  A  warehouseman  is  he  who  under- 
takes as  a  business  to  keep  goods  in  a  warehouse  for 
other  persons. 

Identical  with  Art.  416  of  the  German  Commercial  Code. 

Article  358.  On  the  application  of  the  depositor, 
the  warehouseman  shall  furnish  him  with  a  r£cepisse 
and  a  warrant  for  the  goods  deposited. 


164  COMMERCIAL  CODE  OF  JAPAN. 

The  provision  for  two  instruments  is  derived  from  the  law 
of  France,  Belgium,  Hungary,  Italy  and  Austria.  The 
recepisse  represents  the  rights  of  ownership  in  the  goods 
deposited  and  is  issued  for  the  purpose  of  facilitating  the 
depositor  in  making  an  assignment  of  the  goods ;  the  warrant 
is  an  instrument  issued  for  the  purpose  of  facilitating  the 
depositor  in  making  a  pledge  of  the  goods.  The  warehouse- 
man must  issue  the  two  instruments  at  the  same  time  and 
to  the  same  depositor.  The  depositor  or  the  holder  of  the  two 
instruments  may  pledge  the  goods  by  an  indorsement  of  the 
warrant  and  subsequently  may  sell  his  remaining  rights 
in  the  goods  by  an  indorsement  of  the  recepisse.  He  may 
dispose  of  the  two  instruments  at  the  same  time;  but  he  can- 
not dispose  of  a  single  warrant  after  the  recepisse  has  been 
indorsed  to  the  vendee,  or  in  other  words,  he  cannot  sell  the 
complete  title  of  the  recepisse  without  the  surrender  of  the 
warrant. 

Those  provisions  of  the  present  section  relating  to  the 
recepisse  and  the  warrant  are  not  derived  from  the  German 
Commercial  Code.  The  Codes  of  Germany  and  Spain  adopt 
the  Einscheinsystem:  that  is,  one  instrument  system.  They 
recognize  the  issuing  of  the  recepisse,  but  not  the  other  instru- 
ment which  is  for  the  sole  purpose  of  pledging  the  goods. 
Thus,  if  the  depositor  wants  to  pledge  the  goods,  he  may 
indorse  the  recepisse:  but  after  pledge,  he  can  no  longer 
sell  his  remaining  rights  by  an  indorsement  of  the  warrant 
as  under  the  French  system. 

Article  359.  A  recepisse  and  a  warrant  shall  con- 
tain the  following  particulars,  bearing  a  serial  num- 
ber and  signed  by  the  warehouseman: — 

1 .  The  nature  of  the  goods  received,  their  quality, 
and  quantity,  and  the  nature  of  the  packages,  their 
number  and  marks. 

2.  The  name  or  trade  name  of  the  depositor. 

3.  The  place  where  the  goods  are  kept. 


COMMERCIAL  TRANSACTIONS.  165" 

4.  The  charge  for  keeping  the  goods. 

5.  If  the  period  of  time  for  which  the  goods  are 
to  be  kept  has  been  fixed,  such  period. 

6.  If  the  goods  received  have  been  insured,  the 
amount  insured,  the  period  of  time  for  which  the 
insurance  is  effected,  and  the  name  or  trade  name 
of  the  insurer. 

7.  Where  and  when  the  instruments  were  made. 

Article  360.  When  a  warehouseman  has  fur- 
nished the  depositor  a  recepisse  and  a  warrant,  he 
shall  enter  the  following  particulars  in  his  books: — 

1.  Those  mentioned  in  Art.  359,  Nos.  1,  2,  and 
4-6. 

2.  The  serial  number  of  the  instruments  and  the 
date  on  which  they  were  made. 

It  is  not  only  the  duty  of  a  warehouseman  arising  from 
Art.  25  supra,  but  is  also  necessary  in  the  case  of  Art.  366 
infra,  where  the  instruments  are  lost. 

Article  361.  The  holder  of  a  recepisse  and  of  a 
warrant  may  require  the  warehouseman  to  divide 
the  goods  deposited  and  to  furnish  him  with  a 
separate  rice'pisse  and  a  warrant  for  each  part  thus 
divided.  In  such  case,  the  holder  shall  return  the 
original  recepisse  and  warrant  to  the  warehouseman. 

The  holder  must  bear  the  expenses  arising  from 
the  division  of  the  goods  and  from  furnishing  the 
new  instruments. 

Article  362.  When  a  recepisse  and  a  warrant  have 
been  made,  the  relationship  between  the  warehouse- 
man and  the  holder  in  regard  to  the  business  of 


166  COMMERCIAL  CODE  OF  JAPAN. 

warehousing  is  governed  by  the  terms  of  the  instru- 
ments. 

See  Art.  334  and  notes. 

Article  363.  When  a  recepisse  and  a  warrant  have 
been  made,  the  goods  deposited  cannot  be  disposed 
of  unless  by  means  of  the  instruments. 

Article  364.  Even  though  a  recepisse  and  a  war- 
rant are  issued  to  a  particular  person  designated  in 
the  instruments,  they  may  be  transferred  or  pledged 
by  indorsement,  unless  indorsement  is  expressly 
prohibited  by  the  wording  of  the  instruments.  So 
long  as  the  holder  of  a  recepisse  has  not  used 
the  warranty  he  shall  not  separately  assign  the  two 
instruments  to  different  persons. 

There  are  two  ways,  either  of  which  may  be  taken  by  the 
holder  of  the  two  instruments:  he  may  indorse  the  recepisse 
and  at  the  same  time  surrender  the  warrant  to  the  indorsee; 
or  he  may  first  indorse  the  warrant  to  one  person  and  then 
indorse  the  recepisse  to  another.  But  he  cannot  first  indorse 
the  recepisse  to  one  person  and  then  indorse  the  warrant 
to  another,  for  as  soon  as  he  indorses  the  recepisse,  he  has  no 
longer  any  rights  in  the  goods  deposited. 

Article  365.  The  assignment  of  a  recepisse  by 
indorsement  has  the  same  effect  as  the  assignment 
of  the  goods  deposited. 

Art.  424  of  the  German  Commercial  Code  reads  as  follows : — 

"When  a  warehousekeeper  has  given  a  warehouse  receipt 

transferable  by  indorsement,   and  has  taken  the  goods  on 

deposit,  the  handing  over  of   the  warehouse  receipt  to  him 

who,  by  virtue  of  such  receipt,  has  the  right  to  take  over  such 


COMMERCIAL  TRANSACTIONS.  167 

goods,  confers  the  same  rights  of  property  in  the  goods  as  the 
delivery  of  the  goods  themselves." 

The  said  receipt  is  the  only  warehouse  instrument  recog- 
nized by  the  German  Code  and  this  article  is  the  only  provision 
for  a  warehouse  instrument  under  that  Code. 

Article  366.  When  a  recepisse  or  a  warrant  has 
been  lost,  its  holder  may  require  the  warehouseman 
to  furnish  him  a  new  one,  provided  he  gives  an  ade- 
quate security.  In  such  case,  the  warehouseman 
shall  enter  the  fact  in  his  books. 

Article  367.  When  the  first  indorsement  for  the 
purpose  of  pledge  is  made,  the  amount  of  the  debt, 
its  interest,  and  the  time  of  payment,  shall  be  inserted 
in  the  warrant. 

Unless  the  amount  of  the  debt,  its  interest  and  the 
time  of  payment  have  been  inserted  in  the  recepisse 
and  the  recepisse  has  been  signed  by  the  first 
pledgee,  he  cannot  set  up  his  right  of  pledge  against 
third  parties. 

For  instance:  A,  the  holder  of  the  two  instruments,  in- 
dorses the  warrant  to  B  for  a  certain  debt  due  B.  B,  owing 
to  his  ignorance,  does  not  insist  on  inserting  in  the  recepisse 
the  amount  of  the  debt,  its  interest,  the  time  of  payment  and 
his  signature.  A  afterwards  indorses  the  recepisse  to  C, 
who,  judging  from  the  face  of  the  instrument,  believes  that 
A  has  a  complete  title  to  the  goods,  and,  owing  to  his  negligence, 
fails  to  demand  the  surrender  of  the  warrant.  A,  after  thus 
receiving  double  value  for  the  goods,  becomes  a  bankrupt. 

B,  the  pledgee  of  the  goods,  tries  to  sell  the  goods  for  the  debt. 

C,  the  holder  of  the  recepisse,  sets  up  his  claim  as  owner 
of  the  goods.  C  has  a  good  title  to  the  goods  under  the 
present  article. 


168  COMMERCIAL  CODE  OF  JAPAN. 

Article  368.  If  a  holder  of  a  warrant  cannot  get 
payment  when  the  debt  is  due,  he  shall  have  a  pro- 
test made  in  accordance  with  the  provisions  for 
bills,  notes  and  checks. 

A  protest  is  made  by  a  notary  public  or  a  sheriff  on  the 
application  of  the  holder  of  the  instrument.  See  Arts.  514- 
517,  infra. 

Article  369.  The  holder  of  the  warrant  cannot 
require  the  goods  to  be  sold  by  auction  before  a  week 
has  elapsed  from  the  day  on  which  the  protest  is 
made. 

The  reason  is,  that  during  this  period  of  time  the  holder 
of  the  recepisse  may  have  a  chance  to  know  that  the  goods 
will  be  sold  by  the  pledgee. 

Article  370.  The  warehouseman,  after  deducting 
the  expenses  of  the  auction,  the  taxes  imposed  on 
the  goods,  the  charge  of  the  warehouse,  and  other 
expenses  or  advances  from  the  amount  of  money 
acquired  from  the  auction,  shall  pay  the  remaining 
amount  to  the  holder  of  the  warrant  on  the  surrender 
of  the  instrument. 

If  any  surplus  shall  remain  after  deducting  the 
amount  of  the  said  expenses,  taxes,  charges  and 
advances,  as  well  as  the  amount  of  the  debt  paid  to 
the  holder  of  the  warrant  with  interest  and  the 
expenses  of  the  protest,  the  warehouseman  shall 
pay  the  surplus  to  the  holder  of  the  recepisse  on  the 
surrender  of  the  instrument. 

Art.  421  of  the  German  Commercial  Code  provides  that  a 
warehousekeeper  has  a  right  of  lien  on  the  goods  for  ware- 
housing exprenses,  so  far  as  he  has  them  in  his  possession,  and 


COMMERCIAL  TRANSACTIONS.  16& 

can  dispose  of  them  by  means  of  bills  of  lading,  freight  bills 
or  warrants. 

Article  371.  If  the  money  acquired  from  the 
auction  is  not  sufficient  to  pay  the  whole  amount  of 
the  debt  designated  in  the  warrant,  the  warehouse- 
man shall  enter  the  amount  paid  to  the  holder  on 
the  instrument,  and  return  it  to  the  holder,  and  at 
the  same  time  the  warehouseman  shall  enter  the  fact 
in  his  books. 

Article  372.  The  holder  of  a  warrant  must  first 
receive  payment  out  of  the  goods  deposited,  and  if 
not  satisfied,  he  may  demand  the  shortage  from  the 
debtor  and  the  other  indorsers. 

Article  373.  If  the  holder  of  a  warrant  who  is 
not  paid  when  the  debt  is  due,  fails  to  have  a  protest 
made  or  fails  to  apply  for  the  sale  of  the  goods  by 
auction  within  two  weeks  after  making  the  protest, 
he  loses  his  claim  against  the  indorsers. 

The  holder  has  a  right  to  demand  payment  from  any  one 
of  the  indorsers. 

Article  374.  The  claim  of  a  holder  of  a  warrant 
against  the  debtor  and  the  other  indorsers  is  barred 
by  prescription  if  the  holder  does  not  exercise  his 
right  for  one  year  from  the  time  when  the  debt  was 
due. 

Article  375.  A  depositor  or  a  holder  of  a  recepisse 
may  at  any  time  within  business  hours  require  the 
warehouseman  to  let  him  examine  the  goods,  take 


170  COMMERCIAL  CODE  OF  JAPAN. 

samples,  or  make  any  dispositions  necessary  for  the 
preservation  of  the  goods. 

A  holder  of  a  warrant  may  at  any  time  within 
business  hours  require  the  warehouseman  to  let  him 
examine  the  goods. 

Art.  418  of  the  German  Commercial  Code  provides  that 
the  warehousekeeper  must  allow  the  depositor  during  office 
hours  to  examine  the  goods,  take  samples  and  take  all  neces- 
sary precautions  for  their  safety. 

Article  376.  A  warehouseman  cannot  be  exempted 
from  liability  for  the  loss  or  injury  of  the  goods 
deposited  unless  he  proves  that  he  and  his  employees 
have  not  failed  to  use  due  care  in  keeping  the  goods. 

Article  377.  A  warehouseman  cannot  demand 
payment  of  compensation,  advances  and  other  ex- 
penses for  the  goods  deposited  unless  he  makes  the 
demand  at  the  time  when  the  goods  are  taken  out 
of  the  warehouse.  But  in  case  part  of  the  goods 
are  taken  out,  he  may  demand  a  proportional 
amount. 

Art.  420  of  the  German  Commercial  Code  reads  as  follows : — 

"A  warehousekeeper  has  the  right  to  the  agreed  rent,  or 
the  rent  usual  in  the  locality  where  the  warehouse  is,  to 
reimbursement  for  transport  and  custom  house  expenses, 
as  well  as  to  money  spent  on  account  of  the  goods  to  the 
extent  that  he   has    considered  circumstances  demanded   it. 

"Among  the  sums  due  to  a  warehousekeeper,  disburse- 
ments made  in  ready  money  must  be  immediately  repaid. 

"The  other  warehousing  expenses  must  be  paid  three 
months  after  the  delivery  of  the  goods,  or,  if  they  are  with- 
drawn before,  at  the  time  of  such  withdrawal. 


COMMERCIAL  TRANSACTIONS.  171 

"When  the  goods  are  only  partially  withdrawn,  only  a 
proportionate  amount  of  expenses  are  to  be  paid,  unless  the 
goods  remaining  on  deposit  are  enough  to  cover  warehousing 
expenses." 

Article  378.  If  the  period  of  keeping  the  goods 
has  not  been  fixed  by  the  parties,  a  warehouseman 
shall  not  return  the  goods  unless  six  months  have 
elapsed  from  the  day  when  they  were  stored  in  the 
warehouse.  But  in  case  of  necessity,  he  can  return 
them  at  any  time. 

Art.  422,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"A  warehousekeeper  cannot  ask  a  depositor  to  take  back 
his  goods  before  the  expiration  of  the  time  agreed  on,  and 
if  no  time  has  been  agreed  upon,  before  the  expiration  of 
three  months  from  delivery.  If  a  certain  period  of  time  has 
not  been  agreed  on,  or  if  the  depositor  has  kept  the  goods 
at  the  warehouse  beyond  the  time  agreed  on,  he  can  only 
demand  the  taking  away  of  the  goods  after  one  month's 
notice." 

Article  379.  When  a  rectpisse  and  a  warrant  have 
been  made,  the  return  of  the  goods  cannot  be  de- 
manded unless  the  instruments  are  surrendered. 

Article  380.  A  holder  of  a  recepisse,  though 
before  the  debt  designated  in  the  warrant  is  due, 
may  deposit  with  the  warehouseman  the  whole  sum 
of  the  debt  with  interest  to  the  time  of  maturity 
and  require  the  goods  to  be  returned  to  him. 

The  amount  deposited  according  to  the  previous 
provision  shall  be  paid  to  the  holder  of  the  warrant 
on  the  surrender  of  the  instrument. 


172  COMMERCIAL  CODE  OF  JAPAN. 

The  holder  of  the  recepisse  may  make  payment  to  the  holder 
of  the  warrant  with  interest  to  the  time  of  maturity  and 
require  him  to  surrender  the  warrant.  But  since  the  warrant 
is  negotiable,  it  is  often  no  easy  matter  to  find  its  holder. 

Article  381.  The  provisions  of  Art.  286  are  appli- 
cable when  a  depositor  or  a  holder  of  a  recepisse 
refuses,  or  is  unable  to  receive  the  goods  deposited. 

Article  382.  The  provisions  of  Art.  348  are  appli- 
cable to  a  warehouseman. 

Article  383.  The  responsibility  of  a  warehouse- 
man for  the  loss  or  injury  of  the  goods  deposited  is 
extinguished  by  prescription  after  one  year  has 
elapsed  from  the  day  when  the  goods  were  taken  out 
from  the  warehouse. 

In  case  the  goods  are  totally  lost,  the  period  of 
time  mentioned  above  begins  to  run  as  soon  as  the 
warehouseman  gives  notice  thereof  to  the  holder 
of  the  recepisse,  or  if  such  holder  is  unknown,  to  the 
depositor. 

The  provisions  of  the  previous  paragraphs  are  not 
applicable  where  the  warehouseman  has  acted  in 
bad  faith. 

This  article  is  derived  from  Art.  423  of  the  German  Com- 
mercial Code. 

SECTION  10.— INSURANCE. 
Sub-Section  1. — Insurance  Against  Loss. 

A. — General  Provisions . 

Article  384.  A  contract  of  insurance  against  loss 
is  completed  when  one  party  agrees  to  indemnify 


COMMERCIAL  TRANSACTIONS.  173- 

the  other  for  a  loss  arising  from  a  certain  accident, 
and  the  other  party  agrees  to  pay  a  premium. 

There  are  no  provisions  for  insurance  in  the  book  of  com- 
mercial transactions  of  the  German  Commercial  Code.  How- 
ever, most  of  the  provisions  of  the  present  section,  except 
those  relating  to  fire  insurance,  carriage  insurance  and  life 
insurance,  are  derived  from  the  German  Commercial  Code, 
Book  IV,  Maritime  Commerce,  Section  10,  Marine  Insurance. 

Book  V,  Section  5,  infra,  relates  to  Marine  Insurance,  but 
the  general  provisions  of  this  section  are  also  applicable  to 
Marine  Insurance. 

Article  385.  Only  such  an  interest  as  can  be 
estimated  in  money  may  be  the  subject  of  a  con- 
tract of  insurance. 

Art.  778  of  the  German  Commercial  Code  provides  that 
any  interest  that  can  be  estimated  in  money,  which  any  one 
has  in  a  ship,  may  be  the  subject  of  a  marine  insurance. 

Article  386.  If  the  sum  insured  exceeds  the 
value  of  the  subject-matter  of  insurance,  the  excess 
amount  is  void. 

Art.  786  of  the  German  Commercial  Code  reads  as  follows : — 

"The  insurance  value  of  the  insured  article  is  its  full  value. 

"The  amount  insured  for  cannot  be  more  than  the  value 
of  the  thing  insured. 

"The  insurance  has  no  legal  value  for  the  amount  that  the 
sum  insured  for  exceeds  the  value  of  the  thing  insured." 

Article  387.  In  case  two  or  more  contracts  of 
insurance  are  made  on  the  same  subject-matter  and 
at  the  same  time,  and  the  sums  insured  exceed  the 
value  of  the  subject-matter,  each  insurer  is  respon- 


174  COMMERCIAL  CODE  OF  JAPAN. 

sible  for  an  amount  in  proportion  to  the  sum  respec- 
tively insured  by  him.1 

When  the  dates  of  such  contracts  are  the  same, 
the  contracts  are  presumed  to  have  been  made  at 
the  same  time.2 

1  For  instance:  the  value  of  the  insurable  interest  is  $5,000. 
The  sum  insured  by  A  is  $4,000  and  at  the  same  time  the 
interest  is  insured  by  B  for  the  sum  of  $3,000.  A  is  only 
responsible  for  */7  of  $5,000  and  B  for  %  of  $5,000. 

2  This  article  is  identical  with  Art.  787  of  the  German 
Commercial  Code. 

Article  388.  When  two  or  more  contracts  of 
insurance  are  made  after  one  another,  the  prior 
insurer  is  first  responsible  for  the  loss.  If  the 
amount  insured  by  the  prior  insurer  is  not  sufficient 
to  cover  the  whole  loss,  the  subsequent  insurer  is 
responsible. 

Corresponds  to  Art.  788  of  the  German  Commercial  Code. 

Article  389.  When  the  whole  insurable  interest 
has  been  insured,  a  subsequent  contract  of  insur- 
ance may  be  made  in  the  following  cases : — 

1.  When  it  is  agreed  that  the  right  against  the 
prior  insurer  shall  be  transferred  to  the  subsequent 
insurer. 

2.  When  it  is  agreed  with  the  subsequent  insurer 
that  the  whole  or  part  of  the  right  against  the  prior 
insurer  shall  be  waived. 

3.  When  the  subsequent  contract  is  on  the  con- 
dition that  the  prior  insurer  fails  to  indemnify  for 
the  loss. 


COMMERCIAL  TRANSACTIONS.  175 

Because  in  these  cases  the  insured  can  never  get  a  double 
amount  of  indemnity,  and  it  is  necessary  for  him  to  make 
a  subsequent-  contract  of  insurance  in  case  he  thinks  the 
prior  insurer  is  not  reliable. 

Corresponds  to  Art.  789  of  the  German  Commercial  Code. 

Article  390.  When  two  or  more  contracts  of 
insurance  are  made  at  the  same  time  or  after  one 
another,  the  waiving  of  the  right  against  one  of  the 
insurers  has  no  effect  on  the  rights  or  the  obligations 
of  the  other  insurers. 

Because,  otherwise,  the  prior  insurer  might  conspire  with 
the  insured  to  the  prejudice  of  the  subsequent  insurer,  or 
in  case  one  of  the  insurers  becomes  insolvent,  the  insured 
would  waive  his  right  against  him  and  throw  a  burden  upon 
the  other  insurer. 

Identical  with  Art.  791  of  the  German  Commercial  Code. 

Article  391.  When  part  of  the  insurable  interest 
has  been  insured,  the  insurer  is  responsible  for  the 
loss  according  to  such  proportion  as  the  sum  insured 
bears  to  the  value  of  the  subject-matter. 

For  instance:  the  insurable  interest  is  $1,000.  The  sum 
insured  is  $800.  The  interest  is  partly  lost  and  its  value  is 
reduced  to  $500.    The  insurer  is  responsible  for  $400.    Thus : 

urn  in  sure  > amount  of  loss  =  amount  indemnified  by 

Insurable   interest  J 

the  insurer. 

Identical  with  Art.  792  of  the  German  Commercial  Code. 

Article  392.  When  the  value  of  the  subject- 
matter  has  been  greatly  diminished  during  the  con- 
tinuance of  insurance,  the  preneur  may  require  the 
insurer  to  reduce  the  sum  insured  and  the  premium. 


176  COMMERCIAL  CODE  OF  JAPAN. 

But  the  reduction  of  the  premium  is  valid  only  for  the 
future. 

If  a  commission  merchant  makes  a  contract  of  insurance 
with  an  insurance  company  on  behalf  of  his  principal,  the 
company  is  the  insurer,  the  principal  is  the  insured,  and  the 
merchant  is  the  preneur  d' assurance.  If  the  merchant  makes 
the  contract  on  his  own  account,  he  is  still  the  preneur,  but 
at  the  same  time  he  is  the  insured.  Thus,  the  word  preneur 
under  this  Code  applies  to  a  person  who  makes  a  contract  of 
insurance  either  for  himself  or  for  third  persons,  or,  in  other 
words,  who  may  or  may  not  be  the  insured. 

Article  393.  The  amount  of  the  loss  for  which  the 
insurer  is  to  indemnify  is  determined  by  the  value 
at  the  place  where  and  at  the  time  when  the  loss 
happened.1 

The  expenses  necessary  for  the  calculation  of  the 
loss  must  be  borne  by  the  insurer.2 

1  See  Arts.  656  and  657,  infra,  and  their  notes. 

2  Identical  with  Art.  834,  par.  iv,  of  the  German  Commer- 
cial Code. 

Article  394.  When  the  parties  have  determined 
the  value  of  the  subject-matter,  the  insurer  cannot 
demand  a  reduction  of  the  amount  of  indemnity 
unless  he  proves  that  the  value  is  exceedingly  exag- 
gerated. 

Derived  from  Art.  793,  pars.  1  and  2,  of  the  German  Com- 
mercial  Code. 

Article  395.  An  insurer  is  not  responsible  for  a 
loss  caused  by  war  or  any  insurrection,  unless 
there  is  a  special  agreement  between  the  parties. 


COMMERCIAL  TRANSACTIONS.  1771 

According  to  Arts.  820,  848  and  849  of  the  German  Com- 
mercial Code,  an  insurer  takes  all  the  risks  to  which  the  ship 
or  cargo  is  exposed  during  the  insurance,  and  especially  he 
takes  the  risks  of  war  and  orders  of  the  authorities,  unless 
the  parties  have  agreed  to  the  contrary.  See  Art.  654,  infrar, 
and  its  notes. 

Article  396.  An  insurer  is  not  responsible  for  a 
loss  caused  by  the  nature  or  the  defects  of  the  sub- 
ject-matter, or  by  its  natural  wear  and  tear,  or  by 
the  malicious  intention  or  gross  negligence  of  the 
preneur  or  the  insured. 

Derived  from  Art.  821,  pars.  1,  iiiand  iv,  of  the  German 
Commercial  Code. 

Article  397.  If  at  the  time  of  making  a  contract 
of  insurance,  one  of  the  parties  or  the  insured  knows 
that  the  accident  will  not  happen  or  that  the  acci- 
dent has  already  happened,  such  contract  shall  be 
void. 

Corresponds  to  Art.  785  of  the  German  Commercial  Code. 

Article  398.  If  at  the  time  of  making  a  contract 
of  insurance,  the  preneur  by  his  malicious  intention 
or  gross  negligence  conceals  certain  material  facts 
or  makes  a  misrepresentation  in  regard  to  such 
material  facts,  such  contract  shall  be  void,  unless 
the  insurer  knows  the  facts  or  ought  to  know  them. 

Derived  from  Arts.  806,  807  and  808  of  the  German  Com- 
mercial Code. 

Article  399.  In  case  a  contract  of  insurance  is 
totally  or  partly  void,  the  preneur  and  the  insured 


178  COMMERCIAL  CODE  OF  JAPAN. 

acting  in  good  faith  and  without  gross  negligence, 
the  insured  may  require  the  insurer  to  return  the 
whole  or  part  of  the  premium  already  paid. 

Corresponds  to  Art.  895  of  the  German  Commercial  Code. 

Article  400.  In  case  the  parties  to  a  contract  of 
insurance  have  fixed  a  particular  amount  of  pre- 
mium for  a  particular  risk,  if  such  risk  is  extinguished 
during  the  continuance  of  insurance  the  preneur 
may  require  the  premium  to  be  reduced  for  the 
future. 

Article  401.  A  contract  of  insurance  may  be 
made  on  behalf  of  another  person.  In  such  case  the 
preneur  is  liable  to  the  insurer  for  the  payment  of  the 
premium. 

Derived  from  Arts.  781,  par.  1,  and  812,  par.  2,  of  the 
German  Commercial  Code. 

Article  402.  If  a  preneur  making  a  contract  of 
insurance  on  behalf  of  another  person  without  hav- 
ing any  authority  from  him  does  not  disclose  such 
fact  to  the  insurer,  the  contract  shall  be  void.1  If 
such  fact  is  disclosed,  the  insured  immediately  ac- 
quires the  benefit  of  the  contract.2 

1  The  purpose  of  this  provision  is  to  prevent  a  wager 
insurance. 

Art.  782,  par.  2,  of  the  German  Commercial  Code  provides 
that  in  the  absence  of  this  notice  to  the  insurer,  the  want  of 
previous  authority  cannot  be  rectified  by  the  fact  that  the 
insured  afterwards  accepts  the  contract  of  insurance. 

2  Art.  782,  par.  3,  of  the  German  Commercial  Code  provides 
that  when  such  notice  has  been  given,  the  obligation  of  the 


COMMERCIAL  TRANSACTIONS.  179 

insurer,  so  far  as  the  insurance  is  concerned,  does  not  depend 
upon  the  subsequent  acceptance  by  the  insured. 

Article  403.  On  the  application  of  the  preneur, 
the  insurer  shall  furnish  him  with  a  policy. 

The  policy  shall  contain  the  following  particulars 
with  the  signature  of  the  insurer: — 

1 .  The  subject-matter  of  insurance. 

2.  The  risk  taken  by  the  insurer. 

3.  The  value  of  the  subject-matter,  if  fixed. 

4.  The  sum  insured. 

5.  The  premium  and  the  method  of  its  payment. 

6.  If  the  duration  of  the  insurance  contract  has 
been  fixed,  its  beginning  and  its  end. 

7.  The  name  or  the  trade  name  of  the  preneur. 

8.  The  date  of  the  contract. 

9.  The  place  where  and  the  date  when  the  policy 
was  made. 

Corresponds  to  Art.  784  of  the  German  Commercial  Code. 

Article  404.  If  the  insured  assigns  the  sub- 
ject-matter of  insurance,  it  is  presumed  that  the 
rights  under  the  contract  of  insurance  have  been 
assigned  at  the  same  time. 

If  the  risk  is  greatly  changed  or  increased  by  such 
assignment,  the  contract  of  insurance  becomes  void. 

Art.  899,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 

"When  a  thing  that  has  been  insured  is  alienated,  rights 
belonging  to  the  assured  in  the  terms  of  the  insurance  contract, 
even  with  reference  to  future  accidents,  may  be  transferred 
to  the  new  owner;  such  transfer  authorizes  the  new  owner 
to  enforce  all  claims  against  the  insurer,  as  if  no  alienation 


180  COMMERCIAL  CODE  OF  JAPAN. 

had  taken  place  and  as  if  the  assured  himself  were  enforcing 
his  claims. 

"The  insurer  is  not  liable  for  risks  which  would  not  have 
arisen  if  alienation  had  not  taken  place." 

Article  405.  When  the  insurer  is  adjudged  bank- 
rupt, the  preneur  may  require  an  adequate  security 
to  be  furnished  or  he  may  terminate  the  contract  of 
insurance. 

If  the  preneur  chooses  to  terminate  the  contract, 
such  termination  is  valid  only  for  the  future. 

The  provisions  of  the  previous  paragraphs  are 
applicable  where  the  preneur  is  adjudged  bankrupt, 
unless  he  has  paid  up  the  whole  amount  of  the  pre- 
mium. 

Art.  898  of  the  German  Commercial  Code  reads  as 
follows : — 

"Should  the  insurer  become  insolvent,  the  assured  can,  at 
his  option,  either  retire  from  the  contract,  or  re-demand 
or  retain  all  the  premium,  or  make  another  contract  at  the 
expense  of  the  insurer. 

"He,  however,  can  make  no  use  of  this  right  if  there  is 
sufficient  guarantee  that  the  obligations  of  the  insured  will 
be  fulfilled,  before  he  has  retired  from  the  contract  or  made 
a  new  one." 

Article  406.  When  a  preneur  making  a  contract 
of  insurance  on  behalf  of  another  person  is  adjudged 
bankrupt,  the  insurer  may  require  the  insured  to 
pay  the  premium,  unless  the  insured  has  waived  the 
rights  under  the  contract  of  insurance. 

Corresponds  to  Art.  812,  par.  3,  of  the  German  Commercial 
Code. 


COMMERCIAL  TRANSACTIONS.  181 

Article  407.  Before  the  responsibility  of  the  in- 
surer begins  to  run,1  the  preneur  may  terminate  or 
reform  the  contract  of  insurance.2 

1  For  instance,  in  the  case  of  carriage  insurance,  the  risk 
begins  to  run  as  soon  as  the  carrier  receives  the  goods.  See 
Arts.  423,  659  and  660,  infra. 

2  Art.  897  of  the  German  Commercial  Code  provides  that 
there  can  be  no  cancelling  when  the  risks  have  already  begun 
to  run  for  the  insurer. 

Article  408.  If,  before  the  responsibility  of  the 
insurer  begins  to  run,  circumstances  are  changed, 
but  not  by  the  act  of  the  preneur  nor  by  that  of  the 
insured,  into  such  a  condition  that  the  risk  taken  by 
the  insurer  for  the  whole  or  part  of  the  subject- 
matter  will  not  arise,  the  insurer  shall  refund  the 
whole  or  part  of  the  premium  already  received. 

For  instance:  in  the  case  of  carriage  insurance,  before  the 
goods  are  delivered  to  the  railway  company,  the  railway  is 
destroyed  by  flood  and  the  carriage  becomes  impossible. 
In  such  a  case,  the  insured  may  require  the  premium  to  be 
refunded. 

Art.  894,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"When  the  assured  abandons  altogether  or  in  part,  the 
undertaking  for  which  the  insurance  was  effected,  or  without 
his  assistance,  the  thing  insured,  or  any  part  of  it,  does  not 
find  itself  exposed  to  the  risks  incurred  by  the  insurer,  the 
premium  may  be  re-demanded  or  retained  in  whole  or  in  part, 
subject  to  compensation  due  to  the  insurer.  " 

Article  409.  In  cases  falling  under  Arts.  407  and 
408,  the  insurer  may  claim  a  compensation  equal 
to  one  half  of  the  premium  refunded. 


182  COMMERCIAL  CODE  OF  JAPAN. 

Art.  894,  par.  2,  of  the  German  Commercial  Code  reads  as 
follows : — 

"Such  compensation  (cancelling  dues),  apart  from  agree- 
ment to  the  contrary  or  local  custom  where  the  contract  was 
made,  consists  in  one  half  per  cent  of  the  whole  sum  insured, 
or  of  a  proportionate  part  of  the  latter,  and  if  the  premium 
does  not  amount  to  one  per  cent  of  the  sum  insured,  in  one 
half  of  the  entire  premium  or  a  proportionate  part  of  it." 

Article  410.  If  the  risk  taken  by  the  insurer  is 
greatly  changed  or  increased  during  the  continuance 
of  insurance  through  the  fault  of  the  preneur  or  the 
insured,  the  contract  of  insurance  becomes  void. 

Article  411.  If  the  risk  taken  by  the  insurer  is 
greatly  changed  or  increased  during  the  continuance 
of  insurance  without  the  fault  of  the  preneur  or  the 
insured,  the  insurer  may  terminate  the  contract  of 
insurance.  But  such  termination  is  valid  only  for 
the  future. 

In  such  case,  if  the  preneur  or  the  insured  has 
knowledge  of  the  fact  that  the  risk  has  been  greatly 
changed  or  increased,  he  must  without  delay  give 
notice  thereof  to  the  insurer.  If  he  neglects  to  do  so, 
the  insurer  may  consider  the  contract  of  insurance 
as  void  since  the  change  or  increase  of  the  risk. 

If  the  insurer  has  received  such  notice  or  has  had 
knowledge  of  the  change  or  increase  of  the  risk,  and 
he  does  not  terminate  the  contract  of  insurance 
without  delay,  he  shall  be  treated  as  if  he  had  con- 
firmed the  contract. 

Article  412.  On  the  happening  of  a  loss  caused 
by  the  risk  taken  by  the  insurer^  the  preneur  or  the 


COMMERCIAL  TRANSACTIONS.  183 

insured  having  knowledge  of  such  loss  shall  give 
notice  thereof  to  the  insurer  without  delay. 

Art.  818  of  the  German  Commercial  Code  reads  as  follows: — 
"Every  accident,  directly  the  contracting  party,  or  the 
assured  if  he  knew  of  the  insurance,  receives  news  of,  ought 
to  be  notified  to  the  insurer,  in  default  of  which  the  insurer 
is  authorized  to  deduct  from  the  indemnity  such  amount 
by  which  it  might  have  been  reduced  if  notice  had  been  given 
in  good  time." 

Article  413.  When  the  subject-matter  of  insur- 
ance suffers  a  loss  for  which  the  insurer  is  liable, 
he  cannot  be  exempted  from  liability  even  if  the 
subject-matter  is  afterwards  destroyed  by  a  risk 
for  which  he  is  not  liable. 

Identical  with  Art.  844  of  the  German  Commercial  Code. 

Article  414.  The  insured  must  make  every  effort 
to  prevent  a  loss,  but  the  insurer  is  liable  for  the 
necessary  or  useful  expenses  and  advances  made 
for  that  purpose,  even  though  the  amount  of  such 
expenses  and  advances  exceeds  the  sum  insured. 

In  case  the  insurer  is  liable  under  this  article, 
the  provision  of  Art.  391  is  applicable. 

According  to  Arts.  840  and  834  of  the  German  Commercial 
Code,  the  insurer  is  not  liable  to  compensate  for  damage 
except  to  the  amount  of  the  sum  insured,  but  he  is  bound 
to  reimburse  the  necessary  expenses  which  have  been  incurred 
for  salvage  or  for  avoiding  greater  damage,  even  if  the  total 
indemnity  exceeds  the  sum  insured,  and  the  measures  taken 
have  no  effect. 

Article  415.  In  case  the  subject-matter  of  insur- 
ance is  totally  destroyed,  if  the  insurer  pays  up  the 


184  COMMERCIAL  CODE  OF  JAPAN. 

sum  insured  he  acquires  the  rights  which  the  insured 
had  in  the  subject-matter.  But  in  case  only  part 
of  the  insurable  interest  has  been  insured,  the  insurer 
is  entitled  to  the  rights  in  such  proportion  as  the 
sum  insured  bears  to  the  value  of  the  subject-matter. 

Article  416.  In  case  a  loss  is  caused  by  a  third 
person,  if  the  insurer  pays  the  whole  amount  of 
indemnity  to  the  insured  he  acquires  the  rights  of 
the  preneur  or  the  insured  against  the  third  person 
up  to  the  limit  of  the  amount  paid  by  him. 

If  the  insurer  pays  part  of  the  amount  of  indem- 
nity to  the  insured,  he  can  exercise  his  right  against 
the  third  person  only  so  far  as  the  right  of  the 
preneur  or  the  insured  is  not  injured. 

Corresponds  to  Art.  804  of  the  German  Commercial  Code. 

Article  417.  The  obligation  to  pay  the  sum 
insured  is  barred  by  prescription  after  two  years 
have  elapsed,  and  the  obligation  to  pay  the  premium 
is  barred  after  one  year. 

Art.  905  of  the  German  Commercial  Code  provides  that 
claims  of  the  insurer  and  the  insured  arising  out  of  the  contract 
of  insurance  are  lost  after  five  years. 

Article  418.  The  provisions  of  this  sub-section  are 
applicable  to  mutual  insurance  unless  by  its  nature 
their  application  is  impossible. 

For  instance:  according  to  Art.  404  of  this  Code,  if  the 
insured  assigns  the  subject-matter  of  insurance,  it  is  presumed 
that  the  rights  under  the  contract  of  insurance  have  been 
assigned  at  the  same  time ;  but  Art.  40  of  the  Law  of  Insurance 
Business  provides  that  when  a  member  of  a  mutual  insurance 


COMMERCIAL  TRANSACTIONS.  185 

company  assigns  the  subject-matter,  the  assignee,  only  after 
obtaining  the  agreement  of  the  company,  acquires  the  rights 
and  obligations  of  the  consignor. 

B. — Fire  Insurance. 

Article  419.  The  insurer  is  responsible  for  any 
loss  caused  by  fire  irrespective  of  its  origin,  except 
in  the  cases  of  Arts.  395  and  396. 

Article  420.  The  insurer  is  responsible  for  any 
loss  to  the  subject-matter  of  insurance  caused  by 
necessary  measures  taken  for  the  purpose  of  extin- 
guishing or  avoiding  the  fire. 

Article  421.  If  a  hirer  or  any  other  bailee  has 
effected  an  insurance  on  the  thing  bailed  for  the 
purpose  of  receiving  an  indemnity  to  cover  his 
liability  to  pay  damages,  the  owner  may  directly 
claim  such  indemnity  from  the  insurer. 

Article  422.  In  addition  to  the  particulars  men- 
tioned in  Art.  403,  par.  2,  a  policy  of  fire  insurance 
shall  contain  the  following  facts: — 

1.  The  location  and  construction  of  the  building 
insured,  and  the  purpose  for  which  the  building  is 
used. 

2.  If  movables  are  insured,  the  building  in  which 
they  are  contained  must  be  described  in  accordance 
with  No.  1. 

C. — Carriage  Insurance. 

Article  423.  The  insurer  is  responsible  for  any 
loss   incurred  after  the   carrier   receives   the  goods 


186  COMMERCIAL  CODE  OF  JAPAN. 

and  before  they  are  delivered  to  the  consignee,  unless 
there  is  a  special  agreement  between  the  parties. 

Article  424.  When  goods  in  transit  are  insured, 
the  insurable  interest  is  their  value  at  the  place  and 
time  of  shipping  together  with  the  freight  to  their 
destination  and  other  expenses.1 

Any  profit  to  be  made  by  the  arrival  of  the  goods 
is  included  in  the  insurable  interest  only  in  case 
there  is  a  special  agreement  between  the  parties.2 

1  Same  as  Art.  657,  infra.     See  notes  thereto. 

2  Same  as  Art.  658,  infra.     See  note  thereto. 

Article  425.  In  addition  to  the  particulars  men- 
tioned in  Art.  403,  par.  2,  a  policy  of  carriage  insur- 
ance shall  contain  the  following  facts: — 

1 .  The  route  and  the  method  of  the  carriage. 

2.  The  name  or  the  trade  name  of  the  carrier. 

3.  The  place  where  the  goods  are  to  be  received 
and  delivered. 

4.  If  the  period  of  carriage  is  fixed,  such  period. 

Article  426.  A  contract  of  carriage  insurance 
does  not  become  void,  even  if  under  necessity  such 
carriage  has  been  interrupted  for  a  time  or  the 
route  or  the  method  of  carriage  has  been  changed, 
unless  there  is  a  special  agreement  between  the 
parties. 

Sub- Section  2. — Life  Insurance. 

Article  427.  A  contract  of  life  insurance  is  com- 
pleted when  one  party  agrees  to  pay  a  certain  amount 


COMMERCIAL  TRANSACTIONS.  187   ' 

of  money  on  the  death  or  living  of  the  other  party 
or  of  a  third  person  and  the  other  party  agrees  to 
pay  a  premium. 

Article  428.  The  person  to  receive  the  sum  in- 
sured shall  be  the  insured  himself,  or  his  heir1  or 
relative.2 

Only  a  relative  of  the  insured  can  be  an  assignee 
of  the  rights  arising  from  a  contract  of  life  insurance. 

If  the  person  to  receive  the  sum  insured  dies,  or 
his  relation  to  the  insured  no  longer  exists,  the  preneur 
may  appoint  another  person  to  receive  the  sum,  or 
require  the  amount  accumulated3  for  the  insured  to 
be  paid  back. 

If  the  preneur  dies  without  having  exercised  the 
rights  mentioned  in  the  last  paragraph,  the  insured 
is  to  receive  the  sum  insured. 

1  In  order  to  know  who  is  heir,  it  is  necessary  to  have  a  clear 
knowledge  of  the  organization  of  a  Japanese  family.  A 
Japanese  family  is  much  more  complicated  than  a  European 
or  American  family.  It  consists  of  a  head,  his  spouse  and  his 
relatives,  who  are  living  in  his  house.  Sons  or  even  grandsons 
with  their  wives  usually  live  with  their  parents  or  grand- 
parents. The  head  of  the  family  is  responsible  for  supporting 
all  the  members  of  the  family  and  at  the  same  time  has  certain 
power  over  them. 

The  head  of  the  family  may  be  compared  to  the  king  of  a 
monarchical  government.  When  he  dies,  he  is  succeeded  by 
one  heir.  This  heir  is  fixed  by  law  according  to  the  following 
rules : — 

1.  A  child  is  superior  to  a  grandchild. 

2.  A  male  child  is  superior  to  a  female  child. 

3.  A  female  child  by  a  legal  wife  is  superior  to  a  male 
bastard. 


188  COMMERCIAL  CODE  OF  JAPAN. 

4.  If  there  are  two  children,  or  two  male  children,  or  two 
children  by  a  legal  wife,  the  elder  is  superior. 

Thus,  the  eldest  son  of  the  head  of  the  family  is  usually  the 
heir  to  the  headship.  If  a  rich  man  dies,  his  eldest  son  may 
acquire  all  the  property  and  the  younger  son  may  be  a  poor 
man  living  at  the  mercy  of  his  elder  brother.  In  case  a 
daughter  becomes  the  head  of  the  family,  she  may  bring  her 
husband  to  the  family  and  exercise  the  power  of  a  head 
over  him.  However,  in  the  absence  of  special  terms  in  the 
marriage  contract,  the  husband  will  become  the  head  of  her 
family. 

In  former  times,  the  power  of  the  head  of  the  family  was 
absolute.  All  the  property  of  the  family  was  the  property 
of  the  head,  even  though  it  might  have  been  earned  by  some 
of  the  members.  But  since  the  Civil  Code  was  enforced,  the 
power  of  the  head  has  been  more  or  less  limited.  Now,  a 
member  of  the  family,  who  may  be  a  son  or  a  grandson  or  any 
relative  of  the  head,  has  a  right  to  have  separate  property. 
In  this  respect  the  development  of  Japanese  law  has  been 
somewhat  similar  to  the  development  of  the  rights  of  married 
women  in  limitation  of  the  rights  of  their  husbands  at  the 
common  law.  If  such  a  member  dies,  his  property  will  be 
divided  among  his  children,  and  if  there  are  no  children, 
among  his  grandchildren.  Thus,  if  he  has  several  children, 
all  the  children  are  heirs  to  his  property. 

In  consequence,  there  are  two  kinds  of  heirs  under  the 
Japanese  Civil  Code:  (1)  heir  to  the  headship  of  a  family; 
(2)  heir  to  the  property  left  by  a  person  deceased.  The  law 
concerning  the  former  is  entirely  based  on  the  oriental  custom, 
but  the  law  concerning  the  latter  is  similar  to  the  modern 
European   laws. 

2  According  to  the  Civil  Code,  the  word  "relative"  includes, — 

1.  Relationship  by  blood  to  the  sixth  degree; 

2.  Spouse ; 

3.  Relationship  by  marriage  to  the  third  degree; 

4.  Relationship  between  an  adopted  parent  and  an  adopted 
child; 


COMMERCIAL  TRANSACTIONS.  18ST 

5.  Relationship  between  a  step-parent  and  a  step-child ; 

6.  Relationship  between  a  legal  wife  and  a  recognized 
bastard. 

The  calculation  of  the  degree  is  based  on  the  Roman 
system;  that  is,  the  relationship  between  parent  and  child 
is  the  first  degree,  and  between  grandparent  and  grandchild 
is  the  second  degree,  and  so  forth;  the  relationship  between 
brother  and  brother  is  the  second  degree,  because  the  relation- 
ship between  one  brother  and  the  common  parents  being  the 
first  degree,  and  between  the  common  parents  and  the  other 
brother  being  also  the  first  degree,  two  first  degrees  make  a 
second  degree;  the  relationship  between  cousin  and  cousin 
is  the  fourth  degree,  because  the  relationship  between  one 
cousin  and  the  common  grandparents  being  the  second  degree 
and  between  the  common  grandparents  and  the  other  cousin 
being  also  the  second  degree,  two  second  degrees  make  a 
fourth  degree,  etc. 

Though  the  limitation  of  the  degree  of  relationship  does  not 
differ  very  much  from  the  European  system  (in  Spain  and 
Belgium  also  the  sixth  degree ;  in  Italy,  to  the  tenth  degree ; 
in  France  and  Holland,  to  the  twelfth  degree;  in  Germany 
no  such  limitation),  degrees  of  consanguinity  in  Japan  are 
much  broader  than  those  in  Europe.  The  Japanese  not  only 
recognize  the  degrees  of  consanguinity  by  nature,  but  also 
recognize  the  degrees  of  consanguinity  by  law;  that  is,  the 
relationship  between  an  adopted  parent  and  an  adopted 
child,  the  relationship  between  a  step-parent  and  a  step- 
child, and  the  relationship  between  a  legal  wife  and  a  recog- 
nized bastard,  a  bastard,  when  recognized,  being  considered 
as  a  child  of  the  father  and  at  the  same  time  as  a  child  of  the 
father's  legal  wife. 

Relationship  by  marriage  is  confined  to  the  third 
degree.  Thus,  the  great-grandfather  of  a  husband  is  still  a 
relative  to  the  wife  and  the  great-grandfather  of  a  wife  is 
still  a  relative  to  the  husband;  but  the  great-grandfather's 
father  of  a  husband  is  not  a  relative  to  the  wife  and 
vice  versa. 


190  COMMERCIAL  CODE  OF  JAPAN. 

3  In  case  of  life  insurance,  the  insurer  is  not  allowed  to  take 
the  whole  amount  of  the  premium  as  in  case  of  an  insurance 
against  loss,  but  he  must  reserve  a  certain  amount  of  the 
premium  as  a  reserved  fund  for  the  insured.  If  the  insurer 
is  exempted  from  liability  under  Arts.  395,  431,  par.  2,  and 
433,  par.  2,  or  on  the  termination  of  the  contract  of  insurance, 
he  must  return  such  fund  to  the  insured.  See  Art.  6  of  the 
Law  of  the  Insurance  Business  and  Arts.  15-21  of  the  Regula- 
tions for  the  Insurance  Business. 

Article  429.  If  at  the  time  of  making  a  contract 
of  life  insurance,  the  preneur  or  the  insured  by  his 
malicious  intention  or  gross  negligence  conceals  cer- 
tain material  facts  or  makes  a  misrepresentation  in 
regard  to  such  material  facts,  such  contract  shall  be 
void,  unless  the  insurer  knows  the  facts  or  ought 
to  know  them. 

Article  430.  In  addition  to  the  particulars  men- 
tioned in  Art.  403,  par.  2,  a  policy  of  life  insurance 
shall  contain  the  following  facts: — 

1 .  The  nature  of  the  contract  of  life  insurance. 

2.  The  name  of  the  insured. 

3.  If  the  person  to  receive  the  sum  insured  has 
been  appointed,  the  name  of  such  person  and  his 
relation  to  the  insured. 

Article  431.  The  insurer  is  not  responsible  for 
the  payment  of  the  sum  insured  in  the  following 
cases : — 

1.  When  the  death  of  the  insured  is  in  conse- 
quence of  suicide,  duel,  or  any  other  criminal  act, 
or  is  the  result  of  an  execution  of  a  capital  sentence. 

2.  When  the  person  to  receive  the  sum  insured 


COMMERCIAL  TRANSACTIONS.  19F 

has  intentionally  caused  the  death  of  the  insured. 
But  if  such  person  is  to  receive  part  of  the  sum,  the 
insurer  cannot  be  exempted  from  liability  to  pay 
the  other  part. 

In  the  case  of  No.  1,  the  insurer  shall  pay  back 
the  amount  accumulated  for  the  insured. 

Article  432.  When  the  preneur  or  the  person  to 
receive  the  sum  insured  has  knowledge  of  the  death 
of  the  insured,  he  shall  give  notice  thereof  to  the 
insurer  without  delay. 

Article  433.  The  provisions  of  Arts.  395,  397, 
399-401,  403,  par.  1,  405-407,  410,  411,  417  and  418 
are  applicable  to  life  insurance. 

When,  in  cases  falling  under  Arts.  395,  405,  407, 
410  and  411,  the  insurer  need  not  pay  the  sum 
insured,  he  shall  pay  back  the  amount  accumulated 
for  the  insured. 


BOOK  IV. 

NEGOTIABLE  PAPER. 


SECTION  1— GENERAL  PROVISIONS. 

Article  434.  Negotiable  paper  within  the  mean- 
ing of  this  Code  includes  only  bills  of  exchange, 
promissory  notes  and  checks. 

In  France  the  law  pertaining  to  bills  and  notes  is  a  part 
of  the  Commercial  Code,  but  in  Germany  there  is  a  separate 
statute. 

Article  435.  A  person  who  has  signed  a  paper1  is 
responsible  according  to  the  language  of  such  paper.2 

1  Throughout  this  Book  the  expression  "paper"  is  used 
rather  than  the  somewhat  awkward  phrase  "negotiable  paper" 
or  "negotiable  instrument." 

2  Thus,  evidence  contrary  to  the  language  of  the  paper 
cannot  be  introduced. 

If  a  person  signs  a  sheet  of  paper  intending  it  to  be  filled 
out  as  a  bill  or  note  and  it  is  so  filled,  but  for  a  greater  amount 
or  to  a  different  payee,  the  signer  is  liable.  But  if  one  signs 
a  bill  or  note  and  it  is  subsequently  stolen  from  him,  the 
signer  is  not  liable  to  an  innocent  purchaser  for  value. 

Article  436.  If  an  agent  has  signed  a  paper  with- 
out disclosing  the  fact  that  he  is  acting  for  his 
principal,  the  principal  is  not  responsible  for  such 
paper. 


194  COMMERCIAL  CODE  OF  JAPAN. 

This  is  an  exception  to  the  principle  of  commercial  law 
mentioned  in  Art.  266  supra,  and  a  revival  of  the  general 
rule  of  the  Civil  Code.    See  Art.  100  of  the  Civil  Code. 

Article  437.  A  person  who  has  signed  a  forged1 
or  altered2  paper  is  responsible  according  to  the 
language  of  such  forged  or  altered  paper. 

A  person  who  has  signed  an  altered  paper  is  pre- 
sumed to  have  signed  it  before  its  alteration. 

The  person  who  has  forged  or  altered  the  paper, 
and  any  person  who  has  acquired  it  in  bad  faith  or 
through  gross  negligence,  has  no  rights  under  the 
paper. 

1  A  forged  paper  is  a  paper  the  signature  of  whose  drawer 
or  maker  has  been  forged.  If  the  signature  of  an  indorser 
or  an  acceptor  is  forged,  it  is  a  forged  indorsement,  or  a 
forged  acceptance,  but  not  a  forged  paper.  The  author 
of  a  forged  paper  is  not  responsible  according  the  language 
of  the  paper,  for  his  name  does  not  appear  in  the  paper.  The 
forged  drawer  or  maker  is  not  liable,  for  his  signature  appear- 
ing in  the  paper  is  not  his  real  signature.  The  only  persons 
held  to  be  liable  to  a  bona  fide  holder  under  this  article  are 
those  who  sign  their  names  as  indorsers,  acceptors,  sureties, 
or  acceptors  for  honor. 

2  If  he  signed  the  paper  before  its  alteration,  he  is  not 
responsible  according  to  the  language  of  the  altered  paper. 
For  instance,  when  the  sum  of  money  is  altered  from  $1,000 
to  $2,000,  he  is  only  liable  for  $1,000. 

Article  438.  The  right  of  an  incompetent  person 
to  rescind  a  debt  on  a  paper  does  not  affect  the  other 
rights  and  obligations  under  such  paper. 

For  instance :  if  an  infant  indorses  a  paper,  the  indorsement 
may  be  rescinded  according  to  the  general  principle  of  the 


NEGOTIABLE  PAPER.  195 

Civil  Code;  but  the  indorsee  has  acquired  the  rights  and 
obligations  under  the  paper,  irrespective  of  such  rescission. 
A  signature  induced  by  fraud  or  duress  may  be  rescinded; 
however,  the  signer  can  set  up  such  fraud  or  duress  as  a 
defence  only  against  the  party  who  commits  the  fraud  or 
duress,  or  who  has  knowledge  of  the  fact,  and  not  against  a 
bona  fide  holder.     See  Art.  440,  infra. 

Article  439.  Matters  not  provided  in  this  Book, 
even  though  they  are  mentioned  in  a  paper,  will 
have  no  effect  under  such  paper. 

For  instance:  according  to  the  English  common  law,  days 
of  grace  are  recognized,  but  in  Japan  a  bill  or  note  must 
be  paid  on  the  day  of  maturity  and  such  day  cannot  be  post- 
poned. If  the  parties  to  a  bill  or  note  agree  that  the  days  of 
grace  under  the  English  law  shall  be  adopted  and  it  is  men- 
tioned in  the  instrument  that  the  payment  may  be  made 
during  three  days  after  the  day  of  maturity,  such  a  statement 
will  have  no  effect  against  a  bona  fide  holder,  since  the  days 
of  grace  are  not  provided  in  this  Book. 

Article  440.  A  debtor  on  a  paper  cannot  set  up 
matters  not  provided  in  this  Book  as  a  defence 
against  a  person  making  a  claim  under  the  paper,1 
except  such  matters  as  can  be  directly  set  up  against 
him.2 

1  For  instance:  if  the  defence  of  the  debtor  is  on  the  ground 
that  the  signature  was  induced  by  fraud,  such  defence  is  not 
good,  since  fraud  is  not  a  matter  provided  in  this  Book. 

2  This  article  means  that  the  debtor  may  set  up  what 
would  be  expressed  by  English  common  lawyers  as  an  equity 
against  the  person  who  demands  payment,  but  not  an  equity 
against  the  original  payee  or  one  of  the  indorsers.  Thus 
the  law  in  Japan  is  similar  to  the  law  in  the  United  States, 


196  COMMERCIAL  CODE  OF  JAPAN. 

which  is  no  more  than  saying  that  in  both  countries  bills  and 
notes  are  negotiable. 

Article  441.  A  paper  cannot  be  taken  back  from 
any  person  who  has  acquired  it  without  bad  faith  or 
gross  negligence. 

So  far  as  the  holder  has  acted  in  good  faith  and  without 
gross  negligence,  he  has  acquired  a  good  title  under  Art.  192 
of  the  Civil  Code  even  if  he  has  acquired  the  paper  without 
consideration. 

Article  442.  Presentation  of  a  paper  for  accept- 
ance or  payment,  making  a  protest,  and  any  other 
acts  for  the  purpose  of  exercising  or  preserving  a 
right  under  a  paper  against  a  person  interested,  shall 
take  place  at  the  seat  of  business,  or  in  the  absence 
of  such  seat  of  business,  at  the  residence  or  tempo- 
rary residence  of  such  person,  unless  with  the  consent 
of  such  person  these  acts  may  be  done  at  any  other 
place.1 

If  the  seat  of  business,  the  residence  or  temporary 
residence  of  the  person  interested  is  unknown,  the 
notary  public  or  sheriff2  who  is  to  make  a  protest 
shall  inquire  of  the  government  office  or  any  other 
public  office  at  that  place  about  the  matter. 

If  it  cannot  be  found  in  this  manner,  he  may  make 
a  protest  at  his  office  or  at  the  government  office  or 
any  other  public  office. 

1  Art.  278,  supra. 

2  A  sheriff  is  an  officer  attached  to  the  lowest  court  and 
appointed  by  the  minister  of  justice.  On  the  application  of 
the  parties,  he  is  to  serve  notices,  sell  property  or  make 
protests.    Under  the  command  of  the  court,  he  is  to  serve 


NEGOTIABLE  PAPER  197 

judicial  documents,  collect  fines  or  sell  forfeited  property. 
In  a  criminal  case,  if  not  a  flagrant  offence,  a  summons  must 
be  first  served  on  the  defendant  by  the  sheriff ;  but  if  the  de- 
fendant fails  to  appear,  or  in  case  of  necessity,  a  warrant  of 
production  or  a  warrant  of  detention  must  be  served  by  a 
policeman.  See  Arts.  1-3  of  the  Statute  of  Sheriffs,  Arts. 
94-100  of  the  Statute  on  the  Organization  of  Courts,  and  Art. 
76  of  the  Code  of  Criminal  Procedure. 

Article  443.  Claims  against  an  acceptor  or  a 
maker  of  a  promissory  note  are  barred  by  prescrip- 
tion after  three  years  have  elapsed  from  the  day  of 
maturity;  the  holder's  right  of  recourse  against  the 
prior  parties,  after  six  months  from  the  day  when 
the  protest  was  made;  and  an  indorsees  right  of 
recourse  against  the  prior  parties,  after  six  months 
from  the  day  when  he  paid  the  party  who  exercised 
his  right  of  recourse. 

Article  444.  Even  after  a  debt  on  a  paper  has 
been  barred  by  prescription  or  by  failing  to  take 
certain  necessary  proceedings,  the  holder  does  not 
lose  his  right  of  recourse  against  the  maker,  or  the 
drawer,  or  the  acceptor  for  the  value  received. 

Since  the  prescription  provided  in  this  book  is  particularly 
short,  the  law  gives  the  holder,  as  a  special  favor,  the  right 
to  recover  from  the  person  who  is  primarily  liable  for  a  longer 
period  of  time.  But  the  debt  on  the  paper  has  been  barred 
forever,  and  can  never  revive  again.  The  right  of  the  holder 
under  the  present  article  is  an  ordinary  creditor's  right 
which  can  be  enforced  by  an  ordinary  action,  but  not  by  the 
special  action  under  Arts.  494-496  of  the  Code  of  Civil  Pro- 
cedure. 

The  right  arising  under  the  present  article  will  be  again 
barred   by  prescription  after  ten  years  have  elapsed,  since 


198  COMMERCIAL  CODE  OF  JAPAN. 

it  is  neither  a  debt  on  a  paper  which  must  be  barred  after 
three  years  or  six  months,  nor  a  debt  arising  from  a  com- 
mercial transaction  which  must  be  barred  after  five  years. 


SECTION  2.— BILLS  OF  EXCHANGE. 

Sub- Section  1. — The  Drawing  of  a  Bill  of  Exchange. 

Article  445.  A  bill  of  exchange  shall  contain  the 
following  particulars  with  the  signature  of  the 
drawer : — 

1.  Words  making  the  paper  distinguishable  as  a 
bill  of  exchange. 

2.  A  certain  sum  of  money. 

3.  The  name  or  trade  name  of  the  drawee. 

4.  The  name  or  trade  name  of  the  payee. 

5.  An  unconditional  order  to  pay. 

6.  The  date  of  drawing. 

7.  A  certain  day  of  maturity. 

8.  The  place  of  payment. 

Article  446.  If  the  sum  mentioned  in  the  prin- 
cipal part  of  a  bill  of  exchange  differs  from  that 
mentioned  in  the  other  part,  the  sum  mentioned  in 
the  principal  part  is  the  sum  of  the  bill. 

What  is  the  "principal  part"  is  a  question  of  fact  and  will 
be  decided  by  the  court. 

Article  447.  The  drawer  of  a  bill  may  make  him- 
self the  payee1  or  drawee.2 

1  For  instance :  if  a  merchant  in  Yokohama  exports  goods 
from  Japan  to  New  York,  he  may  draw  a  bill  of  exchange 
making  the  vendee  in  New  York  the  drawee,  and  himself 


NEGOTIABLE  PAPER.  199 

the  payee;  then  he  may  go  to  a  bank  in  Yokohama,  apply 
for  discount,  and  receive  the  price  of  the  goods. 

2  For  instance :  a  trader  in  his  principal  office  may  draw 
a  bill  payable  at  his  branch  establishment.  Since  the  branch 
establishment  is  not  a  different  person,  the  drawer  is  at  the 
same  time  the  drawee.  In  England  such  a  bill  may  be 
treated  as  a  promissory  note,  but  in  Japan  it  is  still  a  bill  of 
exchange. 

Article  448.  The  drawer  may  designate  in  the 
bill  of  exchange  "a  referee  in  case  of  need"  at  the 
place  of  payment. 

When  the  acceptance  is  refused,  the  holder,  after  having  a 
protest  made,  must  first  demand  the  acceptance  from  "the 
referee  in  case  of  need"  before  he  can  exercise  his  right  against 
the  prior  parties.     See  Art.  500,  infra. 

Article  449.  A  bill  of  exchange  payable  to  bearer 
cannot  be  drawn  unless  the  sum  of  the  bill  is  not  less 
than  thirty  yen. 

Because,  if  there  were  no  such  limitation,  a  business  man 
of  good  credit  might  issue  many  bills  for  small  amounts  and 
use  them  as  currency. 

Article  450.  The  maturity  of  a  bill  shall  be  on 
either  one  of  the  following  days: — 

1 .  On  a  fixed  day. 

2.  On  a  fixed  day  after  date. 

3.  At  sight. 

4.  On  a  fixed  day  after  sight. 

Article  451.  If  the  drawer  has  not  fixed  the  day 
of  maturity  in  the  bill  of  exchange,  the  bill  is  pay- 
able at  sight. 


200  COMMERCIAL  CODE  OF  JAPAN. 

Article  452.  If  the  drawer  has  not  fixed  the  place 
of  payment,  the  place  of  payment  is  the  place  of  the 
residence  of  the  drawee  which  has  been  stated  in  the 
bill  of  exchange. 

If  such  residence  is  not  stated,  the  bill  is  invalid. 

Article  453.  If  the  place  of  payment  differs  from 
that  of  the  residence  of  the  drawee,  a  certain  person 
responsible  for  the  payment  instead  of  the  drawee 
may  be  named  in  the  bill. 

Article  454.  The  drawer  may  state  in  the  bill  of 
exchange  that  it  shall  be  payable  at  a  particular 
location  in  the  place  of  payment. 

Sub- Section  2. — Indorsement. 

Article  455.  Even  though  a  bill  of  exchange  is 
issued  to  a  particular  person  designated  in  the  bill, 
it  may  be  transferred  by  indorsement,  unless  indorse- 
ment is  prohibited  by  the  drawer  in  the  bill. 

Article  456.  When  a  drawer,  acceptor,  or  indorsee 
acquires  the  bill  of  exchange,  he  may  again  transfer 
it  by  indorsement. 

Article  457.  An  indorsement  is  made  by  writing 
the  name  or  trade  name  of  the  indorsee  and  the  date 
of  the  indorsement  on  the  bill  of  exchange,  or  its 
copy,  or  its  allonge,  with  the  signature  of  the  indorser. 

An  indorsement  may  be  made  by  simply  signing 
the  name  of  the  indorser.  In  such  case,  the  bill  of 
exchange  may  thenceforth  be  transferred  by  mere 
delivery. 


NEGOTIABLE  PAPER.  201 

Article  458.  The  indorser,  at  the  time  of  the 
indorsement,  may  designate  in  the  bill  of  exchange  "a 
referee  in  case  of  need"  at  the  place  of  payment. 

Article  459.  The  indorser,  at  the  time  of  the 
indorsement,  may  mention  on  the  bill  that  he  does 
not  assume  any  liability  on  it. 

Article  460.  If  the  indorser  at  the  time  of  the 
indorsement  mentions  on  the  bill  that  further  indorse- 
ments are  prohibited,  he  is  not  liable  on  the  bill  to 
parties  subsequent  to  his  indorsee. 

Thus,  even  though  further  indorsements  are  prohibited  by 
an  indorser,  the  bill  still  may  be  indorsed.  The  indorsers, 
except  the  one  who  has  prohibited  further  indorsements,  are 
still  liable  on  the  bill  to  the  subsequent  parties. 

Article  461.  If  an  indorsement  has  been  made  by 
simply  signing  the  name  of  the  indorser,  the  holder 
of  the  bill  may  make  himself  the  indorsee. 

Article  462.  If  the  holder  of  a  bill  makes  an 
indorsement  after  the  time  for  making  a  protest  for 
non-payment  has  elapsed,1  the  indorsee  acquires  only 
the  rights  of  his  indorser.2  In  such  case  the  indorser 
is  not  liable  on  the  bill. 

1  A  protest  for  non-payment  must  be  made  on  the  day 
of  maturity  or  within  two  days  after  the  day  of  maturity. 
See  Art.  487,  infra.  Theoretically,  a  bill  must  be  negotiated 
before  the  day  of  maturity.  However,  as  after  the  day  of 
maturity  and  before  the  time  for  making  a  protest  has 
elapsed,  the  holder  may  still  exercise  his  rights  against  his 
prior  parties,  the  law  treats  an  indorsement  made  within  that 
time  as  an  ordinary  indorsement. 


202  COMMERCIAL  CODE  OF  JAPAN. 

2  Thus,  if  the  right  of  the  indorser  on  the  bill  is  defective, 
the  indorsee  can  acquire  no  better  right  than  his,  because 
the  law  discourages  such  an  indorsement,  though  it  does  not 
make  it  invalid. 

Article  463.  The  holder  may  indorse  the  bill  for 
the  purpose  of  pledging  it  to  the  indorsee  or  for  the 
purpose  of  authorizing  the  indorsee  to  collect  it. 
In  such  case  the  purpose  shall  be  mentioned  in  the 
indorsement. 

Such  indorsee  may  indorse  the  bill  again  for  the 
same  purpose. 

He  can  pledge  it  or  indorse  it  for  collection  but  cannot 
transfer  the  title  absolutely. 

Article  464.  The  holder  of  an  indorsed  bill  cannot 
exercise  his  rights  unless  there  is  an  unbroken  series 
of  indorsements.  But  if  the  bill  has  been  indorsed 
by  simply  signing  the  name  of  the  indorser,  the 
subsequent  indorser  is  deemed  to  have  acquired  the 
bill  by  such  blank  indorsement. 

Sub- Section  3.— Acceptance. 

Article  465.  The  holder  of  a  bill  may  at  any 
time  present  it  to  the  drawee  for  acceptance. 

Article  466.  The  holder  of  a  bill  payable  on  a 
fixed  day  after  sight  shall  present  it  to  the  drawee 
for  acceptance  within  one  year,  but  the  drawer  may 
fix  a  shorter  period  for  presentation. 

If  the  holder  does  not  prove  by  a  certificate  of 
protest  that  he  has  made  such  presentation  as  men- 


NEGOTIABLE  PAPER.  203 

tioned  above,  he  loses  his  rights  under  the  bill  against 
the  prior  parties. 

Article  467.  If  the  holder  presents  a  bill  pay- 
able on  a  fixed  day  after  sight,  and  the  drawee  does 
not  accept  it  or  does  not  write  the  date  of  acceptance 
on  the  bill,  the  holder  shall  have  a  protest  made 
within  the  period  for  presentation.  In  such  case, 
the  date  on  which  the  protest  is  made  is  considered 
as  the  day  of  presentation.1 

If  the  holder  fails  to  have  a  protest  made,  he  loses 
his  rights  under  the  bill  against  the  prior  parties. 

In  case  the  acceptor  does  not  write  the  date  of 
acceptance  on  the  bill,  if  the  holder  fails  to  have  a 
protest  made,  the  last  day  of  the  period  for  presen- 
tation is  considered  as  the  day  of  presentation.2 

1  Thus,  by  that  day,  the  maturity  of  the  bill  payable  on  a 
fixed  day  after  sight  may  be  determined. 

2  Because  in  such  case  the  acceptor  is  still  liable,  but  pay- 
ment cannot  be  demanded  from  the  acceptor  unless  the 
maturity  of  the  bill  payable  on  a  fixed  day  after  sight  is  de- 
termined according  to  this  provision. 

Article  468.  Acceptance  is  made  by  a  written 
declaration  on  the  bill  and  by  adding  the  signature 
of  the  drawee. 

If  the  drawee  has  signed  the  bill,  he  is  deemed  to 
have  accepted  it. 

Article  469.  The  drawee  may  accept  part  of  the 
sum  designated  in  the  bill. 

Except  in  the  case  mentioned  above,  if  the  drawee 
has  given  a  conditional  acceptance,  he  is  deemed  to 


204  COMMERCIAL  CODE  OF  JAPAN. 

have  refused  acceptance,  but  he  is  responsible  accord- 
ing to  the  language  of  his  acceptance. 

According  to  the  French  Commercial  Code,  a  conditional 
acceptance  is  absolutely  void.  In  Austria  a  conditional 
acceptance  is  treated  as  an  absolute  acceptance.  But  in 
Germany  as  well  as  in  Japan,  such  an  acceptor  is  responsible 
according  to  what  he  has  accepted,  though  the  holder  may 
choose  to  exercise  his  right  of  recourse  against  the  prior 
parties. 

Article  470  The  drawee  by  his  acceptance  of  the 
bill  is  liable  on  the  day  of  maturity  for  the  payment 
of  the  sum  accepted. 

Article  471.  In  case  the  acceptor  does  not  pay 
the  bill,  the  amount  to  be  paid  to  the  holder  or  to 
an  indorser  or  the  drawer,  who  has  made  payment 
on  recourse,  is  determined  by  the  provisions  of 
Arts.  491  and  492. 

Article  472.  If  the  place  of  payment  differs  from 
that  of  the  residence  of  the  drawee,  and  a  certain 
person  responsible  for  the  payment  instead  of  the 
drawee  has  not  been  named  in  the  bill  by  the  drawer, 
the  drawee  may  at  the  time  of  acceptance  name  such 
person  in  the  bill.  If  such  person  is  not  named,  he 
himself  is  responsible  to  pay  at  the  place  of  pay- 
ment. 

In  such  case  the  drawer  may  mention  in  the  bill 
that  it  shall  he  presented  for  acceptance.  In  conse- 
quence of  this,  if  the  holder  does  not  prove  by  a 
certificate  of  protest  that  such  presentation  has  been 
made,  he  loses  his  rights  under  the  bill  against  the 
prior  parties. 


NEGOTIABLE  PAPER.  2015  ! 

The  purpose  of  the  presentation  is  to  give  the  drawee  a 
chance  to  name  a  certain  person  responsible  for  the  payment 
instead  of  himself. 

Article  473.  The  drawee,  at  the  time  of  accept- 
ance, may  state  in  the  bill  that  it  shall  be  payable 
at  a  particular  location  in  the  place  of  payment. 

Sub- Section  4. — Collateral  Security. 

Article  474.  If  the  drawee  does  not  accept  the 
bill,  the  holder  may  require  the  prior  parties  to  give 
him  adequate  collateral  security  for  the  sum  of  the 
bill  and  expenses. 

If  the  drawee  accepts  part  of  the  sum  of  the  bill, 
the  holder  may  claim  from  the  prior  parties  adequate 
collateral  security  for  the  rest  of  the  sum  and  ex- 
penses. 

In  Germany  and  other  jurisdictions  under  the  German 
system  of  law,  when  the  acceptance  of  a  bill  is  refused,  the 
holder  cannot  directly  exercise  his  right  of  recourse  against 
the  prior  parties  as  under  the  English  system,  but  he  can  only 
require  the  prior  parties  to  give  him  sufficient  collateral 
security.  Thus,  if  all  the  prior  parties  refuse  to  give  him 
such  collateral,  still  he  cannot  sue  them  on  the  bill,  but  must 
sue  for  the  collateral.  When  the  bill  is  due  and  payment  is 
refused,  he  can  sue  on  the  bill.  Under  the  French  system, 
however,  if  a  bill  is  not  accepted,  the  holder  may  directly 
take  recourse  against  the  prior  parties  or  require  them  to 
give  sufficient  collateral  security. 

Article  475.  When  the  holder  desires  to  exercise 
his  right  under  the  preceding  article,  he  must  have 
a  protest  made  for  non-acceptance  and  must  without 


206  COMMERCIAL  CODE  OF  JAPAN. 

delay  give  notice  of  his  claim  for  collateral  security 
to  the  party  from  whom  he  desires  to  take  security. 

Article  476.  If  an  indorser  receives  a  notice  of 
the  claim  for  collateral  security  from  a  subsequent 
party,  the  indorser  may  require  the  prior  parties  to 
give  him  adequate  collateral  security  for  the  sum 
to  be  secured  by  him  and  expenses. 

In  such  case,  the  indorser  must  without  delay  give 
notice  of  his  claim  for  security  to  the  party  from 
whom  he  desires  to  take  collateral  security. 

Article  477.  The  person  who  receives  notice  of 
the  claim  for  collateral  security  under  Arts.  474-476 
must  without  delay  give  adequate  collateral  security 
on  the  surrender  of  the  certificate  of  protest  for 
non-acceptance.  But  he  may  deposit  an  adequate 
amount  of  money  instead  of  giving  security. 

Article  478.  When  a  prior  party  has  given  col- 
lateral security  or  made  a  deposit,  it  is  deemed  to 
have  been  done  in  order  to  discharge  the  duty  of  any 
subsequent  party  to  give  any  other  security  or  make 
any  other  deposit  and  at  the  same  time  to  give  a 
right  to  any  subsequent  party  to  the  security  given 
or  the  deposit  made.1 

When  the  holder  or  an  indorser  has  given  the  notice 
mentioned  in  Arts.  475  or  476,  par.  2,  it  is  deemed 
to  have  been  given  for  all  the  parties  subsequent  to 
the  person  who  receives  it.2 

1Thus,  when  a  bill  is  "secured"  by  a  prior  party,  any  one 
of  the  subsequent  parties  may  insist  that  further  security 
need  not  be  given;    and  any  one  of  the  subsequent  parties 


NEGOTIABLE  PAPER.  207 

may  exercise  his  right  on  the  security  given  when  he  has  a 
right  against  any  other  prior  party.  In  a  word,  it  is  unneces- 
sary to  give  double  security  for  a  single  bill,  the  acceptance 
of  which  has  been  refused. 

2  For  instance :  A  draws  a  bill  payable  to  B  which  is  in- 
dorsed to  C  and  then  to  D.  Upon  non-acceptance,  D  gives 
a  notice  to  B  demanding  a  collateral  security.  D,  after 
giving  such  notice,  indorses  the  instrument  to  E.  If  E  intends 
to  demand  collateral  security  from  B,  as  his  indorser  D  does, 
it  is  unnecessary  for  E  to  give  any  other  notice  to  B.  If  E 
intends  to  demand  security  from  C,  C  under  Art.  476,  par.  1, 
may  again  require  B  to  give  collateral  security,  and  it  is 
unnecessary  for  C  to  give  such  notice  as  mentioned  in  Art. 
476,  par.  2,  because  D's  notice  is  deemed  to  have  been 
given  for  the  benefit  of  C,  D,  and  E, — the  parties  subse- 
quent to  B,  who  receives  such  notice. 

Article  479.  Any  collateral  security  given  in 
accordance  with  Art.  477  will  lose  its  effect  and 
money  deposited  under  the  same  article  may  be 
taken  back  in  the  following  cases: — 

1.  When  the  bill  is  unconditionally  accepted 
afterwards. 

2  When  the  sum  of  the  bill  and  expenses  are 
paid. 

3.  When  the  person  who  has  given  the  security 
or  made  the  deposit  or  his  prior  party  has  made 
payment  on  recourse. 

4.  When  the  rights  under  the  bill  are  barred  by 
prescription  or  by  failing  to  take  necessary  pro- 
ceedings. 

5.  When  within  one  year  from  the  day  of  matur- 
ity, the  right  of  recourse  has  not  been  exercised 
against  the  person  who  has  given  the  security  or 
made  the  deposit. 


208  COMMERCIAL  CODE  OF  JAPAN. 

The  right  of  recourse  spoken  of  is  the  right  of  recourse  of 
an  indorser,  since  the  holder's  right  of  recourse  has  been 
barred  after  six  months  from  the  day  of  protest.  The  in- 
dorsees right  of  recourse  is  also  barred  by  the  lapse  of  six 
months;  but  if  each  indorser  successively  exercises  his 
right  of  recourse,  it  may  take  several  years. 

Article  480.  In  case  the  acceptor  is  adjudged 
bankrupt,  if  he  does  not  give  any  adequate  collateral 
security,  the  holder  of  the  bill  may  require  "the 
referee  in  case  of  need"  to  accept  it;  but  he  must 
have  a  protest  made  and  give  notice  thereof  to  the 
referee  without  delay. 

If  no  referee  is  mentioned  in  the  bill,  or  the  referee 
does  not  give  an  unconditional  acceptance,  the 
holder  may  claim  adequate  collateral  security  from 
the  prior  parties.  In  such  case  the  provisions  of 
Arts.  474-478  are  applicable. 

Article  481.  Any  security  given  in  accordance 
with  Art.  480,  par.  2,  will  lose  its  effect  and  money 
deposited  under  the  same  paragraph  may  be  taken 
back  in  the  following  cases : — 

1.  When  the  "referee  in  case  of  need"  gives  an 
unconditional  acceptance  afterwards. 

2.  When  the  acceptor  gives  an  adequate  security 
afterwards. 

3.  In  the  cases  mentioned  in  Art.  479,  Nos.  2-5. 

Sub- Section  5. — Payment. 

Article  482.  The  holder  of  a  bill  payable  at  sight 
shall  present  it  for  payment  within  one  year  from  its 
date;  but  the  drawer  may  fix  a  shorter  period  for 
presentation. 


NEGOTIABLE  PAPER.  209~ 

If  the  holder  does  not  prove  by  a  certificate  of 
protest  that  he  has  presented  the  bill  as  mentioned 
above,  he  loses  his  rights  under  the  bill  against  the 
prior  parties. 

Article  483.  Payment  shall  be  made  on  the  sur- 
render of  the  bill. 

The  payor  of  the  bill  may  require  the  holder  to 
note  on  the  bill  that  he  has  received  payment  and 
to  sign  his  name  thereon. 

Article  484.  Even  though  the  whole  amount  of 
the  bill  has  been  accepted,  the  holder  cannot  refuse 
part  payment. 

When  part  payment  has  been  made,  the  holder 
shall  note  it  on  the  bill;  and  he  must  make  a  copy 
thereof,  and  after  signing  it,  deliver  it  to  the  payor. 

Article  485.  If  the  payment  of  the  bill  is  not  de- 
manded, the  acceptor,  after  the  period  for  making  a 
protest  for  non-payment  has  elapsed,  may  deposit 
the  sum  of  the  bill  and  exempt  himself  from  liability. 

See  notes  to  Art.  462,  supra. 

Sub- Section  6. — The  Right  of  Recourse. 

Article  486.  If  the  drawee  does  not  pay  the  bill 
the  holder  may  set  up  a  claim  for  recourse  against 
the  prior  parties. 

Article  487.  When  the  holder  desires  to  exercise 
his  right  of  recourse,  he  must  present  the  bill  to  the 
drawee  for  payment,  and  if  refused,  must  have  a 


210  COMMERCIAL  CODE  OF  JAPAN. 

protest  made  for  non-payment  on  the  day  of  matur- 
ity or  within  two  days  after  that  day.  In  such  case, 
he  must  give  notice  thereof  to  the  party  against 
whom  he  desires  to  take  recourse  before  or  within  the 
next  day  after  the  day  of  protest. 

If  the  holder  does  not  take  such  proceedings,  he 
loses  his  rights  under  the  bill  against  the  prior  parties. 

Article  488.  When  an  indorser  receives  the  notice 
mentioned  in  Art.  487,  par.  1,  from  the  subsequent 
parties,  he  may  set  up  his  claim  for  recourse  against 
the  prior  parties. 

In  such  case,  the  indorser  must  give  notice  of  his 
claim  for  recourse  to  the  party  against  whom  he 
desires  to  take  recourse  before  or  within  the  next  day 
after  the  day  of  his  receiving  notice. 

Article  489.  Even  though  the  holder  has  not  had 
a  protest  made  for  non-payment,  he  does  not  lose 
his  rights  under  the  bill  against  a  party  who  has 
waived  protest. 

When  the  holder  has  had  a  protest  made  for  non- 
payment, a  party  who  has  waived  protest  cannot 
be  exempted  from  liability  for  the  payment  of  the 
expenses  thereof. 

Article  490.  In  case  the  place  of  payment  differs 
from  that  of  the  residence  of  the  drawee,  if  the  holder 
desires  to  take  recourse,  he  must  present  the  bill  for 
payment  to  the  person  who  is  responsible  for  the 
payment  instead  of  the  drawee;  and  if  such  person 
has  not  been  named  in  the  bill,  to  the  drawee  at  the 
place  of  payment.     In  such  case,  if  the  person  respon- 


NEGOTIABLE  PAPER.  211 

sible  for  the  payment  instead  of  the  drawee  or 
the  drawee  himself  does  not  pay  on  presen- 
tation, the  holder  must  have  a  protest  made  for 
non-payment  at  the  place  of  payment,  and  give 
notice  of  his  claim  for  recourse  according  to  the  pro- 
visions of  Art.  487,  par.  1. 

In  case  a  certain  person  responsible  for  the  pay- 
ment instead  of  the  drawee  is  named  in  the  bill,  if 
the  holder  fails  to  take  the  proceedings  mentioned 
above,  he  loses  his  rights  under  the  bill  even  against 
the  acceptor. 

Article  491.  The  holder  may  exercise  his  right  of 
recourse  for  the  following  amounts : — 

1.  The  sum  of  the  bill  which  has  not  been  paid 
and  its  legal  interest  from  the  day  of  maturity. 

2.  The  fee  for  making  the  protest  and  other 
expenses. 

In  case  the  place  of  payment  differs  from  that  of 
the  residence  of  the  party  against  whom  recourse  is 
taken,  the  amount  mentioned  above  is  calculated 
according  to  the  rate  of  exchange  of  a  bill  payable 
at  sight  drawn  from  the  place  of  payment  on  that 
of  the  residence  of  the  party  against  whom  recourse 
is  taken.  If  there  is  no  such  rate  from  the  place  of 
payment  on  such  residential  place,  the  amount  is 
calculated  according  to  the  rate  of  exchange  of  such 
a  bill  drawn  on  the  place  nearest  to  the  place  of  the 
residence  of  the  party  against  whom  recourse  is 
taken. 

For  instance:  the  sum  of  the  bill  with  interest  is  $900.  The 
fee  for  making  the  protest  and  other  expenses  are  $100.  The 
holder  is  entitled  to  $1,000,  if  the  place  of  payment  is  the 


212  COMMERCIAL  CODE  OF  JAPAN. 

same  as  that  of  the  residence  of  the  party  against  whom 
recourse  is  taken.  But  suppose,  the  place  being  different,  the 
holder  in  order  to  obtain  discount  from  the  bank,  has  to  draw 
a  return  bill  from  the  place  of  payment  on  the  party  against 
whom  recourse  is  taken  according  to  the  provision  of  Art. 
493,  infra.  If  the  rate  of  exchange  of  a  bill  payable  at  sight 
drawn  from  the  place  of  payment  on  that  of  the  residence  of 
the  party  against  whom  recourse  is  taken  is  two  per  cent 
lower,  the  holder  may  add  the  amount  of  $20  to  the  bill  and 
make  the  face  value  $1,020.  If  the  rate  is  two  per  cent 
higher  he  must  reduce  the  bill  by  $20  and  make  the  face  value 
$980.  In  other  words  the  holder  is  still  entitled  to  $1,000, 
and  the  fluctuation  of  the  rate  of  exchange  does  not  affect  his 
right  of  recourse. 

Article  492.  An  indorser  against  whom  recourse 
has  been  taken  may  again  exercise  his  right  of 
recourse  for  the  following  amounts: — 

1 .  The  sum  which  he  has  paid  and  its  legal  inter- 
est from  the  day  of  his  payment. 

2.  The  expenses  which  he  has  paid. 

In  such  case  the  provisions  of  Art.  491,  par.  2,  are 
applicable. 

Article  493.  The  holder  or  an  indorser,  for  the 
purpose  of  taking  recourse,  may  again  draw  a  bill 
on  a  prior  party  as  the  drawee  of  the  new  bill. 

Article  494.  A  bill  drawn  by  the  holder  or  the 
indorser  under  the  preceding  article  shall  be  a  bill 
payable  at  sight  and  the  place  of  payment  thereof 
shall  be  the  place  of  the  residence  of  the  party 
against  whom  recourse  is  taken. 

If  such  a  bill  is  drawn  by  the  holder,  the  place  of 
payment  designated  in  the  original  bill  shall  be  the 


NEGOTIABLE  PAPER.  213 

place  of  drawing.  If  such  a  bill  is  drawn  by  an 
indorser,  his  residence  shall  be  the  place  of  draw- 
ing. 

Thus,  the  setting  forth  of  the  place  of  drawing  is  a  require- 
ment of  a  return  bill,  though  not  a  requirement  of  an  ordinary 
bill. 

If  the  place  of  the  drawing  of  a  bill  is  in  a  foreign  country, 
the  validity  of  the  drawing  is  governed  by  the  law  of  that 
country.  See  Art.  125  of  the  Code  for  the  Carrying  Out  of  the 
Commercial  Code. 

Article  495.  Recourse  shall  not  be  taken  unless 
the  bill,  the  certificate  of  protest  for  non-payment 
and  the  account  of  the  expenses  of  the  recourse  are 
surrendered. 

The  party  who  makes  payment  on  recourse  may 
require  the  party  who  receives  payment  to  note  on 
the  account  of  the  expenses  of  the  recourse  that  he 
has  received  the  money,  and  to  place  his  signature 
thereon. 

Article  496.  The  provision  of  Art.  478,  par.  2, 
is  applicable  to  a  claim  for  recourse. 


Sub-Section  7. — Surety. 

Article  497.  A  person  who  has  signed  a  bill  or  its 
copy  or  allonge  for  the  purpose  of  becoming  a  surety 
for  the  debt  on  the  bill  has  the  same  liability  as  the 
principal  debtor,  even  if  the  principal  debt  has 
become  void. 

For  instance,  if  the  signature  of  the  drawer  is  forged,  or 
the  drawer  is  an  infant,  the  surety  is  still  liable. 


214  COMMERCIAL  CODE  OF  JAPAN. 

In  Germany  as  well  as  in  England  there  are  no  special 
provisions  for  a  surety  for  a  bill  or  note.  Even  in  Japan, 
according  to  the  business  custom  the  surety  is  never  expressly 
named  in  a  bill  or  note;  for  an  instrument  with  a  surety 
therein  signifies  that  the  principal  debtor  has  no  good  credit 
and  therefore  the  circulation  of  the  instrument  will  be  more 
or  less  checked.  Practically,  the  principal  debtor  indorses 
the  instrument  to  the  surety  as  indorsee,  and  then  from  him 
it  is  indorsed  to  any  other  party.  Thus,  such  surety  is  really 
an  accommodation  party  under  the  English  law.  But  since 
the  fact  he  is  merely  a  surety  does  not  appear  on  the  face  of 
the  bill,  he  cannot  be  held  liable  under  the  present  article, 
though  he  is  liable  to  a  bona  fide  holder  as  an  ordinary 
.  indorser. 

Article  498.  If  it  is  in  doubt  for  whom  a  person 
has  become  a  surety,  he  is  deemed  to  be  the  surety 
of  the  acceptor ;  but  if  the  bill  has  not  been  accepted, 
he  is  deemed  to  be  the  surety  of  the  drawer. 

See  notes  to  Art.  478,  supra. 

Article  499.  When  a  surety  has  paid  the  debt 
he  acquires  the  rights  which  the  holder  has  had 
against  the  principal  debtor  and  also  the  rights 
which  the  principal  debtor  would  have  against  the 
prior  parties. 

Sub- Section  8. — Intervention. 

A . — Acceptance  for  Honor. 

Article  500.  In  case  the  holder  of  a  bill  has  a 
protest  made  for  non-acceptance,  he  cannot  claim 
collateral  security  from  the  prior  parties  unless 
presentation  for  acceptance  has  been  made  to  the 
1 'referee  in  case  of  need"  who  is  named  in  the  bill. 


NEGOTIABLE  PAPER.  215 

If  the  "referee  in  case  of  need"  does  not  accept 
the  bill,  the  holder  shall  state  such  fact  in  the  certifi- 
cate of  protest  for  non-acceptance. 

Thus,    acceptors   for   honor   are   divided   into   two    kinds: 

(1)  the  referee  in  case  of    need  who  is  named  in  the  bill; 

(2)  any  person  who  intervenes  and  accepts  the  bill  for  the 
purpose  of  saving  the  honor  of  the  drawer  or  an  indorser. 
The  latter  case  is  identical  with  "acceptance  supra  protest" 
under  the  English  Bills  of  Exchange  Act.  In  either  case,  the 
liability  of  an  acceptor  for  honor  is  on  the  condition  that  the 
drawee  refuses  payment. 

Article  501.  The  holder  may  refuse  an  acceptance 
for  honor,  if  such  acceptor  is  not  a  "referee  in  case 
of  need." 

I.e.  If  the  holder  does  not  rely  on  the  person  who  inter- 
venes, he  may  directly  exercise  his  right  of  recourse  against 
the  prior  parties. 

Article  502.  If  acceptance  for  honor  is  offered  by 
several  persons,  the  holder  may  choose  any  one  of 
them  to  accept  the  bill. 

Article  503.  Acceptance  for  honor  is  made  by 
writing  such  acceptance  on  the  bill  with  the  signa- 
ture of  the  acceptor  for  honor. 

If  the  acceptor  for  honor  does  not  designate  in  the 
bill  the  person  for  whose  honor  he  gives  such  accept- 
ance, the  acceptance  is  deemed  to  be  given  for  the 
honor  of  the  drawer. 

Because,  when  the  acceptance  is  given  for  the  honor  of 
the  drawer,  it  will  discharge  the  greatest  number  of  persons 
from  liability. 


216  COMMERCIAL  CODE  OF  JAPAN. 

Article  504.  The  holder  shall  have  the  fact  of 
the  acceptance  for  honor  stated  in  the  certificate  of 
protest  for  non-acceptance,  and  shall  deliver  the 
certificate  to  the  acceptor  for  honor  on  his  payment 
of  the  fee  of  the  protest. 

The  acceptor  for  honor  must  without  delay  send 
the  certificate  of  protest  to  the  person  for  whose 
honor  the  acceptance  is  given. 

Because  it  is  necessary  for  the  person  for  whose  honor  the 
acceptance  is  given  to  have  such  certificate  of  protest  in 
order  to  demand  collateral  security  from  his  prior  parties. 

Article  505.  When  the  drawee  does  not  pay  the 
bill,  the  acceptor  for  honor  is  responsible  for  the 
payment  of  the  bill  and  expenses  to  the  parties  sub- 
sequent to  the  person  for  whose  honor  the  acceptance 
is  given.  But  if  the  holder  does  not  present  the  bill 
for  payment  to  the  acceptor  for  honor  on  the  day 
of  maturity  or  within  two  days  after  that  day,  the 
acceptor  for  honor  is  exempted  from  liability. 

Thus,  the  liability  of  an  acceptor  for  honor  is  quite  different 
from  that  of  an  ordinary  debtor,  since  the  acceptor  for  honor 
is  not  an  absolute  debtor  under  the  bill. 

Article  506.  After  an  acceptance  for  honor,  the 
holder  and  any  other  party  subsequent  to  the  person 
for  whose  honor  the  acceptance  has  been  given  loses 
his  right  to  demand  collateral  security. 

Article  507.  The  person  for  whose  honor  an  ac- 
ceptance is  given  may  demand  collateral  security 
from  his  prior  parties.  In  such  case,  the  provisions 
of  Arts.  475-479  are  applicable. 


NEGOTIABLE  PAPER.  217 

For  instance :  B,  an  indorsee,  indorses  a  bill  to  C.  C  cannot 
get  acceptance  from  Y,  the  drawee.  X  intervenes  and  accepts 
the  bill  for  the  honor  of  B.  In  such  case,  C  can  no  longer 
demand  collateral  security  from  B  under  Art.  506.  But  B 
can  still  demand  collateral  security  from  his  prior  party  A, 
for  on  the  part  of  B,  the  bill  is  still  non-accepted,  and  he  is 
subject  to  the  claim  of  the  acceptor  for  honor,  X. 

B. — Payment  for  Honor. 

Article  508.  In  case  the  holder  has  a  protest 
made  for  non-payment,  if  a  " referee  in  case  of  need" 
has  been  named  in  the  bill  or  an  acceptance  for 
honor  has  been  given,  the  holder  cannot  directly 
take  recourse  against  the  prior  parties  unless  he  has 
presented  the  bill  for  payment  to  the  acceptor  for 
honor,  or  if  there  is  no  such  acceptor  or  such  acceptor 
does  not  pay,  unless  he  has  presented  the  bill  for 
payment  to  the  "referee  in  case  of  need,"  on  the 
day  of  maturity  or  within  two  days  after  that  day. 

If  the  acceptor  for  honor  or  the  "referee  in  case  of 
need"  does  not  make  payment,  the  holder  must 
have  such  fact  stated  in  the  certificate  of  protest. 

If  the  holder  fails  to  take  the  proceedings  men- 
tioned in  the  previous  paragraphs,  he  loses  his  rights 
under  the  bill  against  the  person  who  has  named 
the  "referee  in  case  of  need"  or  the  person  for  whose 
honor  the  acceptance  has  been  given  and  against 
the  parties  subsequent  to  either  of  such  persons. 

Payors  for  honor  may  be  divided  into  three  kinds : — 

1.  The  referee  in  case  of  need. 

2.  The  acceptor  for  honor. 

3.  Any  person  who  intervenes  and  pays  the  bill  for  the 
purpose  of  saving  the  honor  of  the  drawer,  or  an  indorser 
or  the  drawee. 


218  COMMERCIAL  CODE  OF  JAPAN. 

Article  509.  The  holder  cannot  refuse  payment 
for  honor,  even  if  the  payor  is  not  a  '  'referee  in  case 
of  need"  or  an  acceptor  for  honor.  If  he  refuses  such 
payment,  he  loses  his  rights  under  the  bill  against 
the  person  for  whose  honor  the  payment  is  offered 
and  against  the  subsequent  parties  of  such  person. 

Article  510.  If  payment  for  honor  is  offered  by 
several  persons,  the  holder  shall  accept  the  offer 
of  such  person  as  by  his  payment  will  be  able  to  dis- 
charge the  greatest  number  of  persons  from  lia- 
bility. 

For  instance:  If  X  offers  his  payment  for  the  honor  of  an 
indorser  B,  and  Y  offers  his  payment  for  the  honor  of  an 
indorser  C,  B  being  a  party  prior  to  C,  X's  offer  shall  be 
accepted.  Again,  if  Y  offers  his  payment  for  the  honor  of  the 
drawer  A,  and  X  offers  his  payment  for  the  honor  of  the 
indorser  B,  Y's  offer  shall  be  accepted. 

Article  511.  If  the  payor  for  honor  who  is  not  a 
" referee  in  case  of  need"  or  an  acceptor  for  honor 
does  not  designate  the  person  for  whose  honor  the 
payment  is  made,  the  payment  is  deemed  to  be 
made  for  the  honor  of  the  drawer. 

This  is  based  on  the  same  principle  as  the  preceding  article. 

Article  512.  The  holder  shall  have  the  fact  of  the 
payment  for  honor  stated  in  the  certificate  of  pro- 
test for  non-payment,  and  shall  deliver  the  certifi- 
cate and  the  bill  to  the  payor  for  honor  on  his 
payment  of  the  sum  of  the  bill  and  expenses. 

Article  513.  When  the  payor  for  honor  has  made 
payment,  he  acquires  the  rights  of  the  holder  against 


NEGOTIABLE  PAPER.  219 

the  acceptor,  the  person  for  whose  honor  the  pay- 
ment has  been  made,  and  the  prior  parties  of  such 
person. 

Sub-Section  9. — Protest. 

Article  514.  A  protest  is  made  by  a  notary  public 
or  a  sheriff  on  the  application  of  the  holder. 

Article  515.  A  certificate  of  protest  shall  contain 
the  following  particulars  with  the  signature  of  the 
notary  public  or  the  sheriff: — 

1 .  Those  mentioned  in  the  bill,  its  copy,  or  allonge. 

2.  The  name  or  trade  name  of  both  the  party 
protested  against  and  the  protesting  party. 

3.  The  terms  of  the  demand  made  to  the  party 
protested  against,  and  the  fact  that  the  party  pro- 
tested against  did  not  comply  with  the  demand,  or 
the  reason  why  such  party  could  not  be  found. 

4.  The  place  where  and  the  date  when  such 
demand  was  made  or  could  not  be  made. 

5.  In  case  the  seat  of  business  or  the  residence 
or  temporary  residence  of  the  party  protested  against 
is  unknown,  the  fact  that  inquiry  has  been  made 
of  the  government  office  or  other  public  office.1 

6.  When  the  protest  is  made  outside  the  legal 
place,2  the  fact  that  the  party  protested  against 
has  agreed  thereto. 

7.  If  acceptance  for  honor  or  payment  for  honor 
has  taken  place,  the  nature  of  such  intervention  and 
the  name  or  trade  name  of  the  acceptor  for  honor 


220  COMMERCIAL  CODE  OF  JAPAN. 

or  the  payor  for  honor  and  of  the  person  for  whose 
honor  such  acceptance  was  given  or  payment  made. 

1  See  Art.  442,  par.  2,  supra. 

2  See  Art.  442,  par.  2,  supra. 

Article  516.  When  a  claim  under  a  bill  is  to  be 
made  against  several  persons,  it  is  sufficient  to  have 
one  protest  made  for  such  claim. 

Article  517.  When  a  notary  public  or  a  sheriff  has 
made  a  protest,  he  shall  enter  the  whole  contents  of 
the  bill  in  his  books. 

When  a  protest  is  lost,  any  party  interested  may 
require  the  notary  public  or  sheriff  to  give  him  a 
copy  thereof.  Such  copy  will  have  the  same  effect 
as  the  original  protest. 

Sub- Section  10. — Bills  in  a  Set  and  their  Copies. 

Article  518.  The  holder  of  a  bill  may  require 
the  drawer  to  draw  the  bill  in  a  set  and  give  him 
the  parts  of  it.  But  if  the  holder  is  not  the  payee, 
he  must  demand  them  through  the  prior  parties 
successively. 

When  the  drawer  draws  the  bill  in  a  set,  each 
indorser  must  make  an  indorsement  on  each  part 
of  the  set. 

There  is  usually  only  one  copy  made  of  an  inland  bill,  but 
of  foreign  bills  there  are  generally  several  copies  made,  each 
containing  a  condition  in  effect  that  it  is  payable  only  in  case 
the  others  are  unpaid,  and  these  taken  together  are  called  a 
set  or  a  set  of  exchange,  while  a  bill  so  executed  is  said  to  be 


NEGOTIABLE  PAPER.  221" 

drawn  in  a  set.  The  number  of  copies  is  usually  three,  but 
may  be  either  more  or  less;  each  separate  copy  is  known  as 
a  part  of  the  bill.  The  purpose  of  this  is  to  avoid  the  delay 
and  inconvenience  that  may  result  from  the  loss  or  mis- 
carriage of  a  foreign  bill  and  to  facilitate  and  expedite  its 
transmission. 

Article  519.  If  the  parts  of  a  set  are  not  desig- 
nated as  parts  of  the  bill,  each  part  shall  be  treated 
as  an  independent  bill. 

Article  520.  In  case  a  bill  is  drawn  in  a  set,  if 
payment  has  been  made  on  one  part  the  other  parts 
will  have  no  effect  unless  they  have  been  accepted. 

A  person  who  has  indorsed  several  parts  of  a  set 
to  different  persons  or  who  has  accepted  several 
parts  of  a  set  cannot  be  exempted  from  liability 
under  the  bill  on  any  part  which  has  not  been  sur- 
rendered to  him  at  the  time  of  payment. 

Article  521.  When  the  holder  of  a  bill  in  a  set 
has  sent  a  part  thereof  for  acceptance  he  must  note 
on  the  other  parts  where  such  part  will  be  found. 

The  holder  of  the  bill  thus  noted  may  require  the 
person  to  whom  one  part  of  the  bill  has  been  sent 
for  acceptance  to  return  the  part  to  him.  If  he  does 
not  return  it,  the  holder  cannot  demand  collateral 
security  from  or  take  recourse  against  the  prior 
parties  unless  he  proves  by  a  certificate  of  protest 
that  such  person  does  not  return  such  part  and  it  is 
impossible  for  him  to  get  acceptance  or  payment  on 
the  other  part  or  parts. 

Thus,  the  holder  may  send  a  part  of  the  bill  to  his  agent 
or  friend  to  present  it  to  the  drawee  for  acceptance  and  at 


222  COMMERCIAL  CODE  OF  JAPAN. 

the  same  time  he  may  negotiate  the  bill  without  awaiting 
such  acceptance.  The  indorsee,  by  the  note  on  the  bill, 
may  find  the  person  to  whom  such  part  has  been  sent  and 
require  him  to  return  it. 

Article  522.  The  holder  of  a  bill  may  make  its 
copies.1 

If  certain  facts  are  designated  in  a  copy  of  a  bill, 
they  shall  be  distinguished  from  facts  designated 
in  the  original  bill.2 

1  Copies  of  a  bill  must  be  distinguished  from  the  parts  of  a 
set.  In  England  and  the  United  States,  no  general  use  is 
made  of  copies  of  bills  of  exchange.  But  on  the  continent  of 
Europe,  where  a  bill  is  not  drawn  in  sets,  copies  are  negotiated 
while  the  original  is  being  forwarded  for  acceptance. 

2  For  instance :  indorsements  or  surety  may  be  written 
on  the  face  of  a  copy;  they  must  be  in  any  event  made 
distinguishable  from  the  indorsements  or  surety  written  on 
the  back  of  the  original  bill. 

Article  523.  When  the  holder  of  a  bill  has  made 
copies  thereof  and  sent  the  original  bill  for  accept- 
ance, he  must  note  on  the  copies  where  such  original 
bill  will  be  found. 

The  holder  of  a  copy  thus  noted  may  require  the 
person  to  whom  the  original  bill  has  been  sent  for 
acceptance  to  return  the  bill  to  him. 

Article  524.  In  case  the  person  to  whom  the  bill 
has  been  sent  for  acceptance  does  not  return  the 
bill,  the  holder  of  the  copy,  when  he  proves  such 
fact  by  a  certificate  of  protest,  may  demand  col- 
lateral  security   from  those   who   have   signed  the 


NEGOTIABLE  PAPER.  223  - 

copy,  or  he  may  take  recourse  against  them  on  the 
day  of  maturity  which  has  been  designated  in  the 
copy. 

SECTION  3.— PROMISSORY  NOTES. 

Article  525.  A  promissory  note  shall  contain  the 
following  particulars  with  the  signature  of  the 
maker : — 

1.  Words  making  the  paper  distinguishable  as  a 
promissory  note. 

2.  A  certain  sum  of  money. 

3.  The  name  or  trade  name  of  the  payee. 

4.  An  unconditional  promise  to  pay. 

5.  The  date  of  making 

6.  A  certain  day  of  maturity. 

7.  The  place  of  making. 

Article  526.  If  the  maker  of  a  note  does  not 
designate  the  place  of  payment  in  the  note,  the 
place  of  making  is  the  place  of  payment. 

Article  527.  The  holder  of  a  note  payable  on  a 
fixed  day  after  sight  shall  present  it  to  the  maker 
for  acceptance  within  one  year,  but  the  maker  may 
fix  a  shorter  period  for  presentation. 

If  the  holder  does  not  prove  by  a  certificate  of 
protest  that  he  has  made  such  presentation  as  men- 
tioned above,  he  loses  his  rights  under  the  note 
against  any  prior  party  other  than  the  maker. 

Article  528.  If  the  holder  presents  the  note  pay- 
able on  a  fixed  day  after  sight  and  the  maker  does 


224  COMMERCIAL  CODE  OF  JAPAN. 

not  state  on  the  note  the  fact  or  the  date  of  such 
presentation,  the  holder  shall  have  a  protest  made 
within  the  period  for  presentation.  In  such  case,  the 
date  on  which  the  protest  is  made  is  considered  as 
the  day  of  presentation. 

If  the  holder  fails  to  have  a  protest  made,  he  loses 
his  rights  under  the  note  against  any  prior  party 
other  than  the  maker. 

In  case  the  maker  does  not  state  the  date  of 
presentation  on  the  note,  if  the  holder  fails  to  have 
a  protest  made,  the  last  day  of  the  period  for  presen- 
tation is  considered  as  the  day  of  presentation. 

Article  529.  The  provisions  of  Arts.  446,  449- 
451,  453-457,  459-464,  471,  480-499,  508-517  and 
522  are  applicable  to  a  promissory  note. 

SECTION  4.— CHECKS. 

Article  530.  A  check  shall  contain  the  following 
particulars  with  the  signature  of  the  drawer: — 

1.  Words  making  the  paper  distinguishable  as  a 
check. 

2.  A  certain  sum  of  money. 

3.  The  name  or  trade  name  of  the  drawee. 

4.  The  name  or  trade  name  of  the  payee,  or  that 
the  check  is  payable  to  bearer. 

5.  An  unconditional  order  to  pay. 

6.  The  date  of  drawing. 

7.  The  place  of  payment. 

Article  531.  The  drawer  of  a  check  may  make 
it  payable  to  himself. 


NEGOTIABLE  PAPER.  225~ 

Article  532.     A  check  is  payable  at  sight. 

Article  533.  The  holder  of  a  check  shall  present 
it  for  payment  within  a  week  from  its  date. 

If  the  holder  does  not  present  it  for  payment 
within  such  period  of  time,  he  loses  his  right  of  re- 
course against  the  prior  parties. 

Thus,  at  the  expiration  of  one  week,  he  has  no  right  under 
the  check  against  any  person,  since  a  check  need  not  be 
accepted  and  the  drawee  is  not  the  principal  debtor. 

Article  534.  When  the  holder  of  a  check  takes 
recourse  against  the  prior  parties,  he  need  not  have 
a  protest  made;  it  is  sufficient  that  he  causes  the 
drawee  within  a  week  from  the  date  of  drawing  to 
note  the  refusal  of  payment  and  the  date  of  such 
refusal  on  the  check  with  his  signature. 

Article  535.  When  the  drawer  or  the  holder  of  a 
check  draws  two  parallel  lines  on  its  face  and  inserts 
the  word  "bank"  or  any  other  word  of  the  same 
meaning  between  the  lines,  the  drawee  may  make 
payment  on  such  check  only  to  a  bank. 

If  the  drawer  or  the  holder  inserts  the  trade  name 
of  a  particular  bank  between  the  lines,  the  drawee 
may  make  payment  on  such  check  only  to  the 
particular  bank.  But  such  bank  may  appoint  any 
other  bank  to  collect  the  check  by  cancelling  its 
own  trade  name  and  inserting  the  trade  name  of 
the  other  bank. 

The  crossing  of  checks  is  derived  from  England.  See  Sees. 
76-82  of  the  English  Bills  of  Exchange  Act. 


226  COMMERCIAL  CODE  OF  JAPAN. 

Article  536.  The  drawer  of  a  check  shall  be 
punished  by  a  fine  of  from  five  yen  to  a  thousand  yen 
in  the  following  cases: — 

1.  When  he  has  neither  money  nor  credit  in  the 
bank. 

2.  When  the  check  bears  a  false  date. 

Because,  if  such  false  date  is  not  prohibited  the  check  will 
be  negotiable  a  longer  time  than  a  week  and  the  rule  of  Art. 
533  supra  will  be  destroyed.  Thus,  the  drawer  of  a  postdated 
check  which  is  so  common  in  this  country  will  be  fined  in 
Japan. 

Article  537.  The  provisions  of  Arts.  446,  452, 
455,  457,  459-462,  464,  483,  484,  486-489,  491,  492, 
495,  496,  514,  515  and  517  are  applicable  to  a  check. 


BOOK  V. 

MARINE  COMMERCE. 


SECTION  1.— SHIPS  AND  SHIPOWNERS. 

Article  538.  Ships  within  the  meaning  of  this 
Code  are  those  which  are  used  in  a  voyage  at  sea 
for  the  purpose  of  carrying  on  commercial  trans- 
actions. 

The  provisions  of  this  book  are  not  applicable 
to  small  boats  or  to  those  which  are  set  in  motion 
only  or  mainly  by  oars. 

Thus,  ships  sailing  on  lakes,  rivers,  harbors,  and  bays,  and 
even  those  used  in  navigation  at  sea,  such  as  whaling  vessels 
and  exploring  ships,  are  not  ships  within  the  meaning  of  this 
Code. 

Article  539.  Things  entered  in  the  ship's  inven- 
tory are  presumed  to  be  the  appurtenances  of  the 
ship. 

According  to  the  principle  of  the  Civil  Code,  appurtenances 
are  disposed  of  by  the  disposal  of  the  principal  matter.  Thus, 
when  a  ship  is  assigned,  all  the  things  entered  in  the  ship's 
inventory  are  also  assigned,  unless  there  is  a  special  agree- 
ment between  the  parties.  Again,  when  an  insurance  is 
effected  on  a  ship  it  is  presumed  that  the  insurance  is  also 
effected  on  all  the  things  entered  in  the  ship's  inventory. 

Corresponds  to  Art.  478  of  the  German  Commercial  Code. 


228  COMMERCIAL  CODE  OF  JAPAN. 

Article  540.  The  shipowner  must  according  to 
statutory  provisions  make  a  registration  of  the  ship 
and  apply  for  a  certificate  of  its  nationality.1 

The  present  provisions  are  not  applicable  to  ships 
of  less  than  twenty  tons  or  two  hundred  koku.2 

1  Since  a  ship  is  treated  as  real  property,  its  ownership 
must  be  registered  in  the  court.  After  such  registration  the 
owner  may  apply  to  the  marine  authorities  for  another 
registration.  The  latter  application  cannot  be  made  without 
producing  the  copy  of  the  registration  in  the  court.  The 
certificate  of  nationality  is  issued  by  the  marine  authorities 
after  the  second  registration.  Any  ship  without  such  cer- 
tificate cannot  undertake  a  voyage  under  the  Japanese  national 
flag. 

The  purpose  of  the  first  registration  in  the  court  is  to 
ascertain  the  title  of  the  ship  by  a  public  announcement. 
Such  registration  is  based  on  the  same  principle  as  the  regis- 
tration of  real  property.  On  the  other  hand,  the  requirement 
of  the  second  registration  with  the  marine  authorities  is 
based  on  public  policy,  not  for  the  purpose  of  protecting 
private  rights.  See  the  Law  of  the  Registration  of  Ships; 
Regulations  for  the  Registration  of  Ships;  Arts.  5,  6,  10-19 
and  24  of  the  Law  of  Ships  and  Arts.  17-42  of  the  Regulations 
for  the  Carrying  out  of  the  Law  of  Ships. 

2  Ten  cubic  feet  make  one  koku.  See  Arts.  8-16  of  the 
Regulations  for  the  Carrying  out  of  the  Law  of  Ships. 

Article  541.  A  transfer  of  the  ownership  of  a 
ship  cannot  be  set  up  as  a  defence  against  third  per- 
sons unless  such  transfer  has  been  registered  and 
noted  on  the  certificate  of  nationality. 

Article  542.  When  the  ownership  of  a  ship  is 
transferred  during  its  voyage  at  sea,  the  profits 
and  losses  arising  from  such  voyage  belong  to  the 


MARINE  COMMERCE.  229 

transferee,  unless  there  is  a  special  agreement  be- 
tween the  parties. 

Derived  from  Art.  476  of  the  German  Commercial  Code. 

Article  543.  No  attachment  or  provisional  attach- 
ment1 shall  be  levied  on  a  ship  which  is  ready  for  a 
voyage. 

This  provision  is  not  applicable  where  the  debt 
is  incurred  for  the  purpose  of  preparing  the  voyage.2 

1  A  provisional  attachment  is  an  attachment  levied  on  the 
property  of  a  defendant  before  a  final  judgment,  where  if 
such  attachment  were  not  levied,  the  execution  of  the  judgment 
would  become  impossible  or  extremely  difficult.  See  Arts. 
737-754  of  the  Code  of  Civil  Procedure. 

2  This  article  corresponds  to  Art.  482  of  the  German  Com- 
mercial Code. 

Article  544.  A  shipowner  may  at  the  end  of  the 
voyage  exempt  himself  from  liability  for  acts  done 
by  the  captain  within  the  scope  of  his  legal  author- 
ity or  for  damages  done  to  others  by  the  captain  or 
any  other  number  of  the  crew  in  the  execution  of  his 
duties,  by  abandoning  to  the  creditor  the  ship,  the 
freight  and  the  claims  for  damages  or  compensations 
arising  from  the  ship.1  But  this  provision  is  not  appli- 
cable where  the  shipowner  himself  is  to  blame. 

The  present  provisions  are  not  applicable  to  the 
rights  of  a  crew  arising  from  a  contract  of  hire.2 

1  There  is  no  jurisdiction  in  the  world  under  which  a 
shipowner's  liability  for  the  act  of  the  captain  or  any  other 
member  of  the  crew  is  not  limited,  but  the  way  of  limiting 
his  liability  is  not  always  the  same.     The  following  are  the 


230  COMMERCIAL  CODE  OF  JAPAN. 

different  systems  other  than  the  American  system  in  regard 
to  the  limited  liability  of  a  shipowner: — 

(1)  English  system:  According  to  the  English  law  of 
merchant  shipping,  a  shipowner  is  liable  for  a  maximum 
amount  of  money  beyond  which  he  is  not  liable.  This  amount 
is  fixed  according  to  the  tonnage  of  the  ship  and  the  nature  of 
the  subject-matter  which  is  damaged.  Thus,  for  injury  to 
persons,  the  owner  is  not  liable  for  more  than  fifteen  pounds 
per  ton;  for  injury  to  property,  he  is  not  liable  for  more 
than  eight  pounds  per  ton.  The  basis  of  calculation  is  the 
registered  tonnage  with  reference  to  a  sailing  vessel  and  the 
gross  tonnage  with  reference  to  a  steamship.  See  The  Main  v. 
Williams,  152  U.  S.  126-128. 

(2)  French  system :  The  French  law  makes  a  distinction 
between  fortune  de  mer  and  fortune  de  terre.  The  former 
consists  of  the  ship  and  freight,  which  can  be  held  liable;  the 
latter  is  the  owner's  property  on  land,  which  cannot  be  held 
liable.  The  shipowner  may  abandon  the  fortune  de  mer  to 
the  creditor  and  free  himself  from  any  liability.  But  if  he 
does  not  abandon  it,  he  is  unlimitedly  liable.  As  soon  as 
such  property  has  been  abandoned,  it  becomes  the  property 
of  the  creditor.  Even  if  the  value  of  the  property  far  exceeds 
the  value  of  the  debt,  he  can  no  longer  set  up  any  claim 
to  it.  This  system  is  also  called  abandon  system.  See  The 
Scotland,  105  U.  S.  at  p.  28;  Norwich  Co.  v.  Wright,  13  Wal- 
lace, pp.  116-119;  The  Main  v.  Williams,  152  U.  S.  at  p.  126. 

(3)  German  system:  The  Germans  also  recognize  the 
difference  between  fortune  de  mer  and  fortune  de  terre,  which  they 
call  Schiffsvermogen  and  Landvermogen.  The  creditor  can 
levy  on  the  ship  and  freight,  but  he  cannot  levy  on  any 
other  property  of  the  owner,  even  though  the  owner  does 
not  abandon  the  ship  and  freight.  If  the  value  of  the  ship 
and  freight  exceeds  the  value  of  the  debt,  the  creditor  must 
return  the  excess  amount  to  the  owner.  This  system  is 
called  "execution  system."  See  Art.  486  of  the  German  Com- 
mercial Code;  Wendt's  Maritime  Legislation  at  p.  690; 
Sieveking,  The  German  Law  of  Carriage  of  Goods  by  Sea, 
pp.  85-96,  particularly  at  page  86. 


MARINE  COMMERCE.  231 

The  first  Japanese  Commercial  Code  adopted  the  German 
system  in  regard  to  the  limited  liability  of  a  shipowner. 
See  Art.  842  of  the  same  Code.  But  when  it  was  revised, 
the  Japanese  legislators  were  of  opinion  that  the  French 
system  is  more  elastic  and  convenient  than  the  German 
system  and  therefore  the  French  system  was  adopted. 

2  I.e.  The  owner  is  unlimitedly  liable  to  the  captain  and 
other  members  of  the  crew  for  their  salaries  or  other  claims. 

This  paragraph  corresponds  to  Art.  487  of  the  German 
Commercial  Code. 

Article  545.  If  the  shipowner  starts  a  new  voyage 
without  the  consent  of  the  creditor,  he  can  no  longer 
exercise  the  right  mentioned  in  the  preceding  article. 

Article  546.  As  between  co-owners  of  a  ship,  all 
questions  concerning  the  use  of  the  ship  are  decided 
by  a  majority  in  interest. 

Corresponds  to  Art.  491,  par.  1,  of  the  German  Commercial 
Code. 

Article  547.  Co-owners  of  a  ship  shall  bear  the 
expenses  necessary  for  the  use  of  the  ship  in  propor- 
tion to  the  value  of  their  interests. 

Corresponds  to  Art.  500,  par.  1,  of  the  German  Commercial 
Code. 

Article  548.  When  the  co-owners  of  a  ship  have 
resolved  to  undertake  a  new  voyage  or  to  make  an 
extraordinary  repair  of  the  ship,  any  co-owner  who 
opposes  such  resolution  may  require  the  other  co- 
owners  to  buy  his  interest  at  a  reasonable  price. 

The  co-owner  who  requires  the  other  co-owners 


232  COMMERCIAL  CODE  OF  JAPAN. 

to  buy  his  interest  shall  give  notice  to  them  or  to 
the  ship's  husband  within  three  days  after  the  reso- 
lution. But  if  such  co-owner  has  not  taken  part  in 
the  meeting,  he  may  give  notice  within  three  days 
after  he  receives  notice  of  such  resolution. 

This  article  corresponds  to  Art.  501  of  the  German  Com- 
mercial Code. 

Article  549.  Co-owners  of  a  ship  are  liable  for  the 
debts  arising  from  the  use  of  the  ship  in  proportion 
to  the  value  of  their  interests. 

Thus,  the  principle  of  joint  liability  under  the  Commercial 
Code  is  not  applicable  to  the  shipowners  and  the  principle 
of  proportional  liability  is  revived.     See  Art.  273,  supra. 

Art.  507,  par.  1,  of  the  German  Commercial  Code  provides 
that  co-owners  are  not  responsible  as  such  to  third  persons, 
when  their  personal  responsibility  is  in  question,  except  in 
proportion  to  the  value  of  their  shares  in  the  ship. 

Article  550.  A  distribution  of  profits  and  losses 
shall  be  made  to  the  co-owners  of  a  ship  at  the  end 
of  a  voyage  in  proportion  to  the  value  of  their  inter- 
ests. 

Corresponds  to  Art.  502,  pars.  1  and  2,  of  the  German  Com- 
mercial   Code. 

Article  551.  Even  if  there  is  a  partnership  be- 
tween the  co-owners  of  a  ship,  each  co-owner  may 
transfer  the  whole  or  part  of  his  interest  to  other 
persons  without  the  consent  of  the  other  co-owners.1 
But  this  provision  is  not  applicable  to  the  ship's 
husband.2 


MARINE  COMMERCE.  233 

1  Thus,  the  nature  of  the  ownership  of  a  ship  is  similar  to 
a  societe  anonyme. 

Corresponds  to  Art.  503,  par.  1,  of  the  German  Commercial 
Code. 

2  I.e.  If  the  ship's  husband  is  one  of  the  co-owners,  he 
cannot  alienate  his  interest  without  the  consent  of  the  co- 
owners. 


Article  552.  The  co-owners  of  a  ship  shall  appoint 
a  ship's  husband. 

If  a  person  other  than  a  co-owner  of  the  ship  is 
appointed  ship's  husband,  such  appointment  shall 
take  place  with  the  agreement  of  all  the  co-owners. 

The  appointment  of  a  ship's  husband  and  the 
termination  of  his  authority  shall  be  registered. 

Corresponds  to  Art.  492,  par.  1,  of  the  German  Commercial 
Code. 

Article  553.  The  ship's  husband  is  authorized 
to  do  all  acts  in  court  or  outside  of  court  on  behalf 
of  the  co-owners  in  regard  to  the  use  of  the  ship, 
except  that  he  is  not  authorized, — 

1.  To  transfer,  abandon,  let  or  mortgage  the 
ship; 

2.  To  effect  an  insurance  on  the  ship; 

3.  To  undertake  a  new  voyage; 

4.  To  make  extraordinary  repairs  of  the  ship; 

5.  To  borrow  money.1 

Any  restriction  on  the  authority  of  a  ship's  hus- 
band cannot  be  set  up  as  a  defence  against  third 
persons  acting  in  good  faith.2 


234  COMMERCIAL  CODE  OF  JAPAN. 

i 

1  Art.  493  of  the  German  Commercial  Code  provides : — 
With    reference  to  a  third  person,    a    ship's  husband  is, 

by  virtue  of  his  appointment,  authorized  to  undertake  all 
transactions  and  do  all  acts  which  the  carrying  on  the  business 
of  a  co-ownership  usually  entails. 

The  authority  specially  extends  to  the  equipment,  main- 
tenance, and  letting  of  a  ship,  insuring  the  freight,  equipment 
expenses,  expenses  of  average,  as  well  as  such  receipt  of  money 
as  is  usual  in  the  conduct  of  the  business  of  co-ownership. 

A  ship's  husband  may  to  the  same  extent,  represent  the 
co-ownership  in  legal  proceedings. 

He  may  appoint  and  dismiss  the  captain;  the  captain 
must  submit  to  his  order  and  not  to  those  of  the  other  co- 
owners. 

A  ship's  husband  may  not,  without  being  specially  author- 
ized, render  the  co-owners  or  certain  of  them  liable  on  bills 
of  exchange,  nor  borrow  nor  sell  the  ship  or  shares  of  the 
ship,  nor  give  it  in  pledge,  nor  insure  it  in  whole  or  in  part. 

2  Corresponds  to  Art.  495  of  the  German  Commercial  Code. 

Article  554.  The  ship's  husband  shall  keep  a 
special  book  and  enter  therein  all  the  facts  in  regard 
to  the  use  of  the  ship. 

The  ship's  husband  at  the  end  of  each  voyage 
must  without  delay  render  an  account  of  the  voyage 
and  submit  it  to  each  co-owner  of  the  ship  for  his 
approval. 

This  article  is  derived  from  Arts.  498  and  499  of  the  German 
Commercial  Code 

Article  555.  If  a  ship  might  lose  its  Japanese 
nationality  by  a  transfer  of  the  interest  of  a  co- 
owner  or  by  the  loss  of  his  own  nationality,1  the 
other  co-owners  have  a  right  to  buy  such  interest  at 


MARINE  COMMERCE.  235 

a  reasonable  price  or  to  apply  to  the  court  for  a 
public  auction.2 

If  a  ship  of  a  company  might  lose  its  Japanese 
nationality  by  a  transfer  of  the  interest  of  a  mem- 
ber, the  other  members  in  the  case  of  a  societe  en  nom 
collectif,  or  the  members  of  unlimited  liability  in  the 
case  of  a  societe  en  commandite  or  society  en  commandite 
par  actions,  have  a  right  to  buy  such  interest  at  a 
reasonable  price.3 

1  In  Japan,  if  one  of  the  co-owners  of  a  ship  is  an  alien, 
the  ship  will  lose  its  Japanese  nationality.  See  Art.  1  of  the 
Law  of  Ships. 

2  Art.  503,  par.  2,  of  the  German  Commercial  Code  pro- 
vides that  the  alienation  of  an  interest  in  a  ship  involving  the 
loss  of  the  right  of  using  the  imperial  flag  cannot  be  effected 
without  the  consent  of  all  the  co-owners. 

3  According  to  the  Law  of  Ships,  if  one  of  the  members  of 
a  societe  en  nom  collectif  is  an  alien,  a  ship  belonging  to  such 
company  will  lose  its  Japanese  nationality;  and,  if  one  of  the 
members  of  unlimited  liability  of  a  societe  en  commandite  or 
a  societe  en  commandite  par  actions  is  an  alien,  the  effect  will 
be  the  same.  When  a  ship  belongs  to  a  societe  anonyme, 
all  the  directors  must  be  Japanese  citizens,  otherwise  the 
ship  will  become  a  foreign  ship.  Thus,  the  transfer  of  the 
shares  of  a  societe  anonyme  does  not  affect  the  nationality  of 
the  ship  belonging  to  the  company  unless  the  alien  transferee 
is  appointed  director. 

Article  556.  When  the  hiring  of  a  ship  has  been 
registered,  the  contract  is  valid  even  against  a 
person  who  acquires  the  title  of  the  ship  afterwards. 

Because  the  ship  is  treated  as  real  property.  See  Art.  605 
of  the  Civil  Code. 


236  COMMERCIAL  CODE  OF  JAPAN. 

Article  557.  When  the  hirer  uses  the  ship  in  a 
voyage  at  sea  for  the  purpose  of  carrying  on  a  com- 
mercial transaction,  he  has  the  same  rights  against, 
and  the  same  obligations  to,  third  persons  as  a  ship- 
owner in  regard  to  the  use  of  the  ship. 

In  such  case  a  right  of  maritime  lien1  arising  from 
the  use  of  the  ship  is  valid  even  against  the  ship- 
owner unless  the  person  having  such  right  has 
knowledge  of  the  fact  that  such  use  of  the  ship  is 
contrary  to  the  original  contract  between  the  hirer 
and  the  owner.2 

1  See  Arts.  680-689,  infra. 

2  Art.  510  of  the  German  Commercial  Code  reads  as 
follows : — 

"He  who  fits  out  on  his  own  account  a  ship  not  belonging 
to  him  for  the  purpose  of  carrying  on  maritime  commerce 
and  sails  it  himself  or  hands  it  over  to  a  captain  is  considered 
as  owner  in  his  relations  with  third  persons. 

'The  proprietor  has  no  right  to  prevent  any  one  claiming  a 
debt  against  the  ship,  in  the  course  of  its  employment,  from 
making  good  his  rights,  unless  such  employment  was  illegal 
or  the  creditor  is  not  acting  in  good  faith." 

SECTION  2.— THE  CREW. 

Sub-Section  1.— The  Captain  of  a  Ship. 

Article  558.  The  captain  cannot  be  exempted 
from  liability  for  damages  to  the  shipowner,  char- 
terer, consignor  and  other  persons  interested  unless 
he  proves  that  he  has  used  due  care  in  performing 
his  duties. 

Even  though  the  captain  has  acted  according  to 
the   instructions   of   the   shipowner,    he   cannot   be 


MARINE  COMMERCE.  237 

exempted  from  liability  to  persons  other  than  the 
shipowner. 

This  article  corresponds  to  Art.  512  of  the  German  Com- 
mercial Code. 

Article  559.  The  captain  cannot  be  exempted 
from  liability  for  any  damage  to  other  persons  caused 
by  a  mariner  in  the  performance  of  his  duties, 
unless  he  proves  that  he  has  used  due  care  in  super- 
vision. 

The  word  "mariner"  used  in  the  present  Code  denotes 
any  employee  of  the  shipowner  on  board  the  ship  except  the 
captain,  though  in  some  statutes  or  regulations,  such  as 
the  law  of  the  correction  of  mariners  and  the  regulations  for 
the  examination  of  mariners,  the  same  word  includes  the 
captain. 

Article  560.  If  the  captain  under  an  unavoid- 
able circumstance  cannot  command  the  ship,  he 
may  appoint  another  person  to  perform  his  duties, 
unless  the  law  or  ordinance  provides  to  the  con- 
trary. When  such  appointment  has  taken  place, 
the  captain  is  only  responsible  to  the  shipowner  for 
the  appointment. 

Art.  516,  par.  2,  of  the  German  Commercial  Code  reads 
as  follows: — 

"Even  if  the  captain  is  prevented  through  illness  or  other 
reasons  from  conducting  the  ship,  he  must  not  delay  starting 
on  or  discontinue  a  voyage;  he  must,  moreover,  if  time  and 
circumstances  permit,  get  further  instructions  from  the  owner, 
make  him  aware  of  the  impediment  without  delay  and  at 
the  same  time  take  necessary  steps,  or,  if  there  is  no  time, 
get  himself  replaced  by  another  captain.  He  is  only  responsible 
for  his  substitute  so  far  as  he  is  to  blame  in  choosing  him." 


238  COMMERCIAL  CODE  OF  JAPAN. 

Article  561.  The  captain  must  before  the  starting 
of  a  voyage  make  an  inspection  of  the  ship  as  to 
whether  it  is  sea-worthy  and  whether  all  prepara- 
tions necessary  for  the  voyage  have  been  properly 
made. 

Derived  from  Art.  513  of  the  German  Commercial  Code. 

Article  562.  The  captain  shall  keep  in  the  ship 
the  following  documents:1 — 

1.  The  certificate  of  nationality. 

2.  The  list  of  the  mariners. 

3.  The  ship's  inventory. 

4.  The  sea  journal.2 

5.  The  list  of  the  passengers. 

6.  All  documents  in  regard  to  the  carriage  con- 
tract and  the  cargo. 

7.  All  documents  issued  from  the  custom  house. 
If  the  ship  is  not  going  to  foreign  countries,   it 

may  be  provided  by  ordinance  that  the  documents 
mentioned  in  Nos.  3-5  need  not  be  kept  in  the  ship.3 

1  Derived  from  Art.  513  of  the  German  Commercial  Code. 

2  Arts.  519  and  520  of  the  German  Commercial  Code  read 
as  follows: — 

"A  journal  must  be  kept  on  every  ship,  in  which  all  notable 
events  of  each  voyage  ought  to  be  written  from  the  moment 
when  either  the  freight  or  the  ballast  has  begun  to  be  taken  on 
board. 

"The  journal  must  be  kept  under  the  supervision  of  the 
captain  by  the  pilot,  and  if  the  latter  is  prevented,  by  the 
captain  himself  or  by  a  capable  member  of  the  crew  chosen 
by  the  captain  and  under  his  supervision. 

"From  day  to  day  must  be  noted  in  the  journal, — 
"The  state  of  the  wind  and  weather. 
"The  course  taken  by  the  ship  and  the  distance  traversed. 


MARINE  COMMERCE.  239 

"The  ascertained  latitude  and  longitude. 
"The  height  of  water  in  the  pumps. 

"In  addition  there  ought  to  be  written  in  the  journal, — 
"The  depth  of  water  fathomed  by  the  sounding  line. 
"Every  boarding  of  a  pilot,  with  the  time  of  his  arrival  and 

of  his  leaving. 
"Any  change  in  the  ship's  crew. 
"The  resolutions  passed  in  a  council  of  officers. 
"All  accidents  happening  to  a  ship  or  cargo  and  a  description 

of  how  they  occurred. 

"There  must  also  be  written  all  punishable  acts  committed 
on  the  ship  and  the  penalties  meted  out  for  them,  as  well  as 
the  births  and  deaths  that  take  place. 

"Entries  must  be  made  every  day  if  nothing  prevents. 

"The  journal  must  be  signed  by  the  captain  and  pilot." 

3  Art.  521  of  the  German  Commercial  Code  provides  that 
federal  states  may  enact  that  the  keeping  of  a  logbook  is 
not  necessary  for  small  boats. 

Article  563.  The  captain  shall  not  leave  the  ship 
from  the  time  of  the  embarkment  of  the  goods  and 
passengers  to  the  time  of  their  disembarkment, 
unless  he  has  entrusted  his  duties  to  the  person  who 
may  command  the  ship  instead  of  him,  or  under  an 
unavoidable  circumstance  he  is  obliged  to  leave  the 
ship  without  having  entrusted  them  to  such  person. 

Corresponds  to  Art.  517,  par.  1,  of  the  German  Commercial 
Code. 

Article  564.  As  soon  as  the  ship  is  ready  for  a 
voyage,  the  captain  must  set  sail  without  delay  and 
must  proceed  directly  to  the  destination  without 
changing  the  route  already  fixed,  except  in  the  case 
of  necessity. 

Corresponds  to  Art.  516,  par.  1,  of  the  German  Commercial 
Code. 


240  COMMERCIAL  CODE  OF  JAPAN. 

Article  565.  During  the  voyage  the  captain  shall 
treat  the  cargo  in  such  a  manner  as  is  the  most 
beneficial  to  all  the  parties  interested. 

A  party  interested  may  exempt  himself  from  lia- 
bility in  regard  to  the  cargo  arising  from  the  act  of 
the  captain  by  abandoning  the  cargo  to  the  creditor. 
But  this  is  not  applicable  where  the  party  interested 
is  himself  to  blame. 

Art.  535  of  the  German  Commercial  Code  reads  as  follows : — 

"The  captain  is  bound  during  the  voyage  to  give  the 
greatest  possible  care  to  the  cargo  and  the  interests  of  the 
owners  of  it. 

"When  it  is  necessary  to  take  particular  measures  to  avoid 
or  minimize  a  loss,  he  is  bound  to  look  after  the  interests  of 
the  owners  of  the  cargo  as  their  representative,  to  take  their 
instructions  as  far  as  possible  and  to  conform  to  them  so  far 
as  circumstances  permit,  or  act  as  he  thinks  best,  and  to  see 
to  the  best  of  his  ability  that  all  those  parties  interested  in 
the  cargo  are  informed  as  soon  as  possible  of  any  accidents, 
and  the  measures  he  has  been  obliged  to  take. 

"He  is  specially  authorized,  in  such  events  to  discharge 
the  whole  or  part  of  the  cargo,  and  in  case  of  extremity, 
when  an  important  loss  caused  by  an  imminent  deterioration 
cannot  be  avoided,  or  for  similar  reasons,  to  sell  or  grant 
a  bottomry  bond  with  the  object  of  procuring  the  means 
of  preserving  it  or  transporting  it  further;  he  may  also,  in 
case  of  arrest  or  capture,  reclaim  it,  or  if  taken  away  from 
him  in  any  other  manner,  seek  its  restitution  by  legal  or 
other  procedure." 

Article  566.  Outside  of  the  port  of  registry,1  the 
captain  is  authorized  to  do  all  acts  in  court  or  out- 
side of  court  necessary  for  the  voyage. 

In  the  port  of  registry  the  captain  is  only  author- 
ized to  hire  or  dismiss  mariners  unless  he  is  specially 
authorized.2 


MARINE  COMMERCE.  241 

1  The  port  of  registry  of  a  ship  may  be  compared  to  the 
residence  of  a  person  or  the  seat  of  business  of  a  trader.  Such 
port  is  the  place  where  the  registrations  of  the  ship  in  the 
court  and  with  the  marine  authorities  are  made.  See  Arts. 
4  and  5  of  the  Law  of  Ships  and  Art.  2  of  the  Regulations 
for  the  Registration  of  Ships. 

2  This  article  corresponds  to  Arts.  526  and  527  of  the 
German  Commercial  Code. 

Article  567.  Any  restriction  on  the  authority  of 
the  captain  cannot  be  set  up  as  a  defense  against 
third  persons  acting  in  good  faith. 

Corresponds  to  Art.  531  of  the  German  Commercial  Code. 

Article  568.  The  captain  is  not  authorized  to  do 
the  following  acts,  except  they  are  done  for  the 
purpose  of  defraying  the  expenses  of  repairs  of  the 
ship,  of  assistance  or  sauvetage,1  or  other  expenses 
necessary  for  the  continuance  of  the  voyage:2 — 

1.  The  mortgage  of  the  ship. 

2.  Borrowing  money. 

3  Selling  or  pledging  the  whole  or  part  of  the 
cargo,  except  in  cases  falling  under  Art.  565,  par.  1. 

When  the  cargo  has  been  sold  or  pledged  by  the 
captain,  the  amount  of  damages  is  determined  by 
the  value  at  the  port  of  disembarkment  at  the  time 
when  the  cargo  should  have  arrived.  But  all  ex- 
penses which  need  not  be  paid  must  be  deducted 
from  such  value.3 

1  The  words  "assistance"  and  "sauvetage"  are  often  used 
in  this  Book.  Assistance  is  to  save  another  ship  at  sea  which 
is  about  to  wreck;  sauvetage  is  to  save  another  ship  at  sea 
which  has  already  suffered  wreck.     In  the  former,  the  ship 


242  COMMERCIAL  CODE  OF  JAPAN. 

is  still  under  the  control  of  the  crew;  in  the  latter  the  crew 
has  abandoned  the  ship.  Such  difference  is  originally  derived 
from  the  French  Ordonnance  de  la  Marine  issued  by  Louis  XIV 
in  1681. 

2  Art.  528  of  the  German  Commercial  Code  reads  as 
follows  5 — 

"The  captain  cannot  borrow,  buy  on  credit,  or  conclude 
credit  operations  of  any  kind,  except  when  it  is  necessary 
for  preservation  of  the  ship  and  for  finishing  the  voyage,  and 
then  only  to  such  an  extent  as  necessity  compels. 

"He  cannot  contract  a  bottomry  loan  except  when  it  is 
necessary  for  finishing  the  voyage,  and  then  only  to  such  an 
extent  as  necessity  compels. 

"The  validity  of  the  transaction  concluded  neither  depends 
on  the  actual  employment  of  money,  nor  the  choice  made  by 
the  captain  among  several  ways  of  getting  credit,  nor  that 
the  necessary  money  was  at  the  disposal  of  the  captain, 
unless  the  third  person  acted  in  bad  faith." 

See  Art.  535  of  the  same  Code  quoted  in  note  to  Art.  565 
supra. 

Again,  Art.  538  of  the  same  Code  reads  as  follows : — 

"Outside  the  cases  provided  for  by  Art.  535,  the  captain 
cannot  borrow  on  a  bottomry  bond,  on  the  cargo,  or  partially 
dispose  of  it  by  selling  or  any  other  manner,  except  in  case 
of  necessity  with  a  view  to  continuing  the  voyage." 

3  See  Art.  340,  par.  3,  supra. 

Article  569.  If  the  captain  without  special  author- 
ity has  made  advances  out  of  his  own  pocket  or 
incurred  debts  in  his  own  name  for  the  purpose  of 
the  voyage,  the  shipowner  may  exercise  his  right 
mentioned  in  Art.  544  against  such  captain. 

Corresponds  to  Art.  532  of  the  German  Commercial  Code. 

Article  570.  When  the  ship  becomes  unrepair- 
able outside  of  the  port  of  registry,  the  captain  may 


MARINE  COMMERCE.  243 

sell  the  ship  by  auction  with  the  permission  of  the 
marine  authorities. 

Art.  530  of  the  German  Commercial  Code  reads  as  follows : — 

"The  captain  only  has  authority  to  sell  the  ship  in  case 
of  absolute  necessity,  or  only  after  it  has  been  so  decreed 
by  the  local  court  after  hearing  experts  and  having  consulted 
with  the  German  consul,  if  there  is  one. 

"If  there  is  no  authority,  judicial  or  any  other  kind,  in  the 
place  to  make  an  inquiry,  the  captain,  for  his  own  justifica- 
tion, ought  to  get  the  opinion  of  experts,  and  if  that  is  not 
possible,  furnish  himself  with  other  proofs. 

"The  sale  must  be  effected  publicly." 

Article  571.  A  ship  is  considered  as  unrepairable 
in  the  following  cases: — 

1.  When  the  ship  cannot  be  repaired  at  its 
anchorage,  and  it  is  impossible  to  reach  a  place 
where  the  repairs  can  be  made. 

2.  When  the  cost  of  the  repairs  would  be  more 
than  three-fourths  of  the  value  of  the  ship. 

The  value  mentioned  above  is  the  value  the  ship 
had  when  it  started  on  its  voyage,  if  the  ship  has 
been  damaged  during  the  voyage;  and  in  any  other 
case,  it  is  the  value  the  ship  had  before  its  damage. 

Article  572.  The  captain  may  make  use  of  the 
cargo  for  the  purpose  of  the  voyage,  if  such  use  is 
necessary  for  the  continuance  of  it. 

In  such  case  the  provisions  of  Art.  568,  par.  2,  are 
applicable. 

Article  573.  The  captain  must  without  delay  make 
a  report  to  the  shipowner  on  all  important  facts  in 
regard  to  the  voyage. 


244  COMMERCIAL  CODE  OF  JAPAN. 

The  captain  must  without  delay  at  the  end  of  a 
voyage  render  an  account  of  the  voyage  and  submit 
it  to  the  shipowner  for  his  approval.  If  the  ship- 
owner requires  such  account,  he  must  submit  it  at 
any  time. 

Art.  534  of  the  German  Commercial  Code  provides  as  fol- 
lows : — 

"The  captain  is  obliged  to  keep  the  owner  constantly  in- 
formed of  the  condition  of  the  ship,  of  the  events  of  the 
voyage,  the  contracts  entered  into  and  actions  in  suspense, 
and  to  ask  instructions  from  him  in  all  important  cases,  so 
far  as  circumstances  permit,  especially  in  the  cases  of  Arts. 
528  and  530,  or  when  he  finds  himself  obliged  to  change 
the  course  of  or  interrupt  the  voyage,  or  on  the  occasion  of 
unusual  repairs  or  purchases. 

"As  for  extraordinary  repairs  and  purchases,  even  if  he 
can  provide  for  them  with  the  means  of  the  owner  at  his 
disposal  he  must  only  have  recourse  to  them  in  case  of 
necessity. 

"If  to  provide  for  some  necessity  he  cannot  get  the  necessary 
money  otherwise  than  giving  a  bottomry  bond  or  selling 
apparatus  and  supplies  which  can  be  dispensed  with,  he  must 
take  such  measures  as  are  least  prejudicial  to  the  owner. 

"He  must  render  an  account  to  the  owner  on  his  return 
to  port  as  often  as  the  latter  requires  one." 

Article  574.  The  shipowner  may  dismiss  the  cap- 
tain at  any  time;  but  if  he  is  dismissed  without  rea- 
sonable cause,  he  may  claim  damages  from  the 
shipowner  if  he  suffers  from  such  dismissal.1 

In  case  the  captain  is  a  shipowner,  if  he  is  dis- 
missed against  his  will  he  may  require  the  other 
owners  to  buy  his  interest  at  a  reasonable  price. 


MARINE  COMMERCE.  245 

When  the  captain  intends  to  exercise  such  right, 
he  must  without  delay  give  notice  to  the  other  owners 
or  to  the  ship's  husband.2 

1  Arts.  545  and  548  of  the  German  Commercial  Code  are 
substantially  the  same. 

2  The  second  and  third  paragraphs  of  this  article  are 
derived  from  Art.  552  of  trie  German  Commercial  Code. 

Article  575.  Any  claim  of  the  captain  against  the 
shipowners  is  barred  by  prescription  after  one  year 
has  elapsed. 

Sub-Section  2. — Mariners. 

The  provisions  relating  to  mariners  are  not  found  in  the 
German  Commercial  Code. 

Article  576.  A  mariner,  after  the  procedure  of 
hiring  has  been  completed,  must  embark  on  board 
the  ship  at  the  time  appointed  by  the  captain. 

A  mariner  cannot  leave  the  ship  on  board  which 
he  has  embarked  without  the  permission  of  the  cap- 
tain. 

The  hiring  or  dismissal  of  a  mariner  or  the  renewal  or 
alteration  of  such  contract  of  hiring  must  be  acknowledged 
before  the  marine  authorities.  If  the  shipowner  or  the  captain 
fails  to  apply  for  an  acknowledgment,  he  shall  be  fined. 
When  the  marine  authorities  take  such  acknowledgment, 
certain  facts  must  be  entered  in  the  book  of  mariners,  and 
after  they  are  read  to  both  the  hirer  and  the  hired,  the  parties 
must  insert  their  signatures  and  affix  their  seals.  See  Arts. 
26,  27  and  58  of  the  Law  of  the  Crew. 

Article  577.  The  food  of  a  mariner  during  his 
service  must  be  provided  for  by  the  shipowner. 


246  COMMERCIAL  CODE  OF  JAPAN. 

Article  578.  If  a  mariner  during  his  service  be- 
comes ill  or  receives  hurt  without  his  own  miscon- 
duct or  any  other  gross  fault,  the  shipowner  is  liable 
for  the  expenses  of  medical  treatment  and  nursing 
for  a  period  not  more  than  three  months. 

In  such  case,  the  mariner  may  claim  wages  for  the 
service  he  has  rendered;  but  if  he  becomes  ill  or 
receives  hurt  through  the  performance  of  his  duties, 
he  may  claim  the  whole  wages. 

Article  579.  If  wages  are  to  be  paid  in  a  lump  for 
each  voyage,  and  the  time  of  the  voyage  is  pro- 
longed, or,  except  in  case  of  absolute  necessity,  the 
distance  of  the  voyage  is  lengthened,  a  mariner  may 
claim  a  proportionate  increase  of  wages.  But  if  the 
time  or  distance  is  shortened,  the  right  of  a  mariner 
to  claim  the  whole  wages  is  not  affected. 

Article  580.  If  a  mariner  dies  after  rendering  his 
service,  the  shipowner  shall  pay  his  wages  up  to  the 
day  of  his  death. 

If  a  mariner  dies  for  the  sake  of  the  performance 
of  his  duties,  the  expenses  of  his  burial  must  be 
borne  by  the  shipowner. 

Article  581.  In  the  following  cases,  a  mariner 
may  be  dismissed  by  the  captain: — 

1 .  When  before  the  voyage  a  mariner  seems  to  be 
unfit  for  his  service. 

2.  When  a  mariner  excessively  neglects  his  duties 
or  commits  a  gross  fault  in  regard  to  his  duties. 

3.  When  a  mariner  is  sentenced  to  imprisonment 
or  any  other  punishment  which  is  severer  than  im- 
prisonment. 


MARINE  COMMERCE.  247 

4.  When  a  mariner  becomes  ill  or  receives  hurt 
and  he  can  no  longer  render  his  service. 

5.  When,  under  an  unavoidable  circumstance, 
the  voyage  cannot  be  started  or  continued. 

In  the  cases  of  Nos.  1-3,  the  mariner  may  claim 
his  wages  for  the  service  he  has  rendered. 

In  the  cases  of  Nos.  4  and  5,  the  mariner  may 
claim  his  wages  up  to  the  day  of  his  dismissal  and  he 
is  also  entitled  to  a  free  passage  to  the  port  where 
he  was  hired.  But  in  the  case  of  No.  4,  if  he  is  in 
fault,  he  is  only  entitled  to  his  wages  for  the  service 
he  has  rendered. 

Article  582.  If  a  mariner  is  dismissed  without 
any  one  of  the  causes  mentioned  in  Art.  581,  par.  1, 
he  may  claim  his  wages,  not  only  for  the  period  of 
time  during  which  he  has  rendered  his  service,  but 
also  for  an  additional  month.  If  he  is  dismissed 
outside  of  the  port  where  he  was  hired,  he  may 
claim  his  wages  for  the  time  which  is  spent  in  his 
return  to  such  port  and  he  is  also  entitled  to  a  free 
passage  to  the  same  port. 

Article  583.  In  the  following  cases,  a  mariner 
may  claim  his  dismissal: — 

1 .  When  the  ship  loses  its  Japanese  nationality. 

2.  When  a  mariner,  without  his  own  fault,  becomes 
ill  or  receives  hurt  and  can  no  longer  render  his 
service. 

3.  When  a  mariner  is  ill  treated  by  the  captain. 
In  these  cases,  the  mariner  may  claim  his  wages 

up  to  the  day  of  his  dismissal  and  he  is  also  entitled 
to  a  free  passage  to  the  port  where  he  was  hired. 


248  COMMERCIAL  CODE  OF  JAPAN. 

Article  584.  If  the  ownership  of  the  ship  is  trans- 
ferred during  the  voyage,  each  mariner  has  the  same 
rights  against  the  new  owner  and  the  same  obliga- 
tions to  him  as  under  the  original  contract  of  hiring 
between  the  mariner  and  the  former  owner. 

Article  585.  The  term  of  the  hiring  of  a  mariner 
shall  not  exceed  one  year.  If  a  mariner  is  hired  for 
a  longer  term  than  one  year,  such  term  shall  be  re- 
duced to  the  legal  term. 

The  hiring  of  a  mariner  may  be  renewed,  but  not 
for  a  term  longer  than  one  year  from  the  time  of  such 
renewal. 

Article  586.  In  the  absence  of  a  special  agree- 
ment between  the  parties,  if  the  term  of  hiring  has  not 
been  fixed,  a  mariner  cannot  claim  his  dismissal 
before  the  ship  is  safely  anchored  and  the  disembark- 
ment  of  the  goods  and  passengers  is  completed. 

Article  587.  The  contract  of  the  hiring  of  a 
mariner  is  terminated  in  the  following  cases: — 

1.  When  the  ship  sinks. 

2.  When  the  ship  becomes  unrepairable. 

3.  When  the  ship  is  captured. 

Tn  such  cases,  the  mariner  may  claim  his  wages 
up  to  the  day  on  which  the  contract  is  terminated, 
and  he  is  also  entitled  to  a  free  passage  to  the  port 
where  he  was  hired. 

Article  588.  When  a  mariner  is  entitled  to  a  free 
passage,  he  may  claim  its  expenses  instead  of  such 
passage. 


MARINE  COMMERCE.  249 

Article  589.  Any  claim  of  a  mariner  against  the 
shipowner  is  barred  by  prescription  after  one  year 
has  elapsed. 

SECTION  3.— CARRIAGE. 

Sub-Section  1. — Carriage  of  Goods. 

A . — General  Provisions. 

Article  590.  When  the  whole  or  part  of  a  ship  is 
chartered,  each  party,  on  the  application  of  the 
other  party,  must  furnish  him  with  a  charter-party. 

Identical  with  Art.  557  of  the  German  Commercial  Code. 

Article  591.  The  shipowner  must  warrant  to  the 
charterer  or  shipper  that  the  ship  is  seaworthy  at 
the  commencement  of  the  voyage. 

Art.  559  of  the  German  Commercial  Code  provides  that 
the  owner  is  bound  to  furnish  a  ship  in  a  seaworthy  condition 
unless  the  defect  could  not  be  discovered  by  the  application 
of  the  care  of  an  ordinary  shipowner. 

Article  592.  Even  though  there  is  an  agreement 
between  the  parties  to  the  contrary,  the  shipowner 
cannot  be  exempted  from  liability  for  damages  caused 
by  the  shipowner  himself,  or  by  the  willful  act  or 
gross  negligence  of  the  crew  or  any  other  employee 
or  by  the  fact  that  the  ship  is  unseaworthy. 

This  provision  is  based  on  a  resolution  passed  by  the 
International  Commercial  Law  Conference  held  in  Brussels 
in  1888. 

Article  593.  Any  goods  which  have  been  em- 
barked in  violation  of  the  law  or  ordinances  or  the 


250  COMMERCIAL  CODE  OF  JAPAN. 

contract  of  carriage  may  be  disembarked  at  any 
time  by  the  captain,  and  if  they  threaten  to  damage 
the  ship  or  the  rest  of  the  cargo,  they  may  be  jetti- 
soned. But  if  the  captain  carries  such  goods,  he 
may  charge  the  highest  freight  for  that  kind  of 
goods  at  the  place  and  time  of  embarkment. 

These  provisions  do  not  affect  the  rights  of  the 
shipowner  or  any  party  interested  to  claim  damages. 

This  article  is  derived  from  Arts.  563  and  564  of  the 
German  Commercial  Code. 

Article  594.  In  case  the  whole  ship  is  chartered, 
the  shipowner  must  without  delay  give  notice  to  the 
charterer  when  the  necessary  preparations  for  the 
embarkment  of  goods  have  been  completed.1 

If  a  period  of  time  has  been  fixed  for  the  embark- 
ment of  the  goods,  the  period  begins  to  run  from 
the  next  day  after  such  notice.  If  the  goods  are 
embarked  after  the  expiration  of  the  period,  the  ship- 
owner may  claim  a  reasonable  compensation  as 
demurrage,  even  though  there  has  been  no  special 
agreement  between  the  parties.2 

The  days  during  which  embarkment  is  prevented 
by  circumstances  beyond  the  control  of  the  party  may 
be  deducted  from  such  period.3 

1  Corresponds  to  Art.  567,  par.  1,  of  the  German  Commercial 
Code. 

2  Corresponds  to  Art.  567,  pars.  2  and  5,  of  the  German 
Commercial   Code. 

3  Art.  573  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"When  time  of  loading  and  demurrage  days  are  being 
calculated,  the  days  will  be  counted  as  following  without 


MARINE  COMMERCE.  251 

interruption;  especially  will  be  reckoned  Sundays  and  holi- 
days, as  well  as  days  on  which  the  charterer  has  been  pre- 
vented by  accident  from  delivering  the  cargo. 

"Nevertheless,  the  days  are  not  reckoned  on  which  through 
wind  and  weather,  or  through  any  other  accident,  either, — 

"(1)  The  delivery,  not  only  of  the  cargo  agreed  upon, 
but  any  other  kind  of  cargo  on  the  ship,  or, 

"(2)     The  receipt  of  the  cargo  is  prevented." 

Article  595.  If  the  captain  is  to  receive  goods 
from  a  third  person  and  such  person  cannot  be  ascer- 
tained or  he  does  not  embark  the  goods,  the  captain 
shall  instantly  give  notice  to  the  charterer.  In  such 
case,  the  charterer  may  embark  the  goods  only  within 
the  period  of  time  fixed  for  embarkment. 

Corresponds  to  Art.  577,  par.  1,  of  the  German  Commercial 
Code. 

Article  596.  Even  though  the  charterer  has  not 
embarked  all  of  the  goods,  he  may  require  the 
captain  to  start  on  the  voyage. 

But  such  charterer  must  pay,  in  addition  to  the 
whole  amount  of  freight,  all  expenses  arising  from 
the  fact  that  he  has  not  embarked  all  of  the  goods,1 
and  on  the  demand  of  the  shipowner,  must  furnish 
him  with  an  adequate  security.2 

1  I.e.  The  expenses  for  the  loading  of  ballast  and  for  the 
disposition  of  the  goods. 

2  Because  the  goods  are  security  for  the  freight  or  other 
debts;  since  the  goods  have  been  lessened,  the  creditor  may 
demand  another  security. 

This  article  corresponds  to  Art.  578  of  the  German  Com- 
mercial Code. 


252  COMMERCIAL  CODE  OF  JAPAN. 

Article  597.  After  the  expiration  of  the  period  of 
time  fixed  for  embarkment,  the  captain  may  in- 
stantly start  on  the  voyage,  even  though  the  char- 
terer has  not  embarked  all  of  the  goods. 

In  such  case  the  provisions  of  Art.  596,  par.  2,  are 
applicable. 

This  article  corresponds  to  Art.  579  of  the  German  Com- 
mercial Code. 

Article  598.  Before  the  commencement  of  the 
voyage,  the  charterer  may  terminate  the  contract 
on  payment  of  one-half  of  the  freight.1 

If  the  ship  is  chartered  for  a  return  voyage  and 
the  charterer  terminates  the  contract  before  the 
commencement  of  the  return  voyage,  he  shall  pay 
two  thirds  of  the  freight.  This  provision  is  appli- 
cable where  the  ship  is  to  move  from  another  port 
to  the  port  of  embarkment  and  the  charterer  termi- 
nates the  contract  before  the  commencement  of  the 
voyage  from  the  latter  port.2 

If  the  contract  is  terminated  after  the  whole  or 
part  of  the  goods  has  been  embarked,  the  charterer 
must  bear  the  expenses  of  their  embarkment  and 
disembar  kment . 3 

If  the  charterer  does  not  embark  the  goods  within 
the  period  of  time  fixed  for  embarkment,  the  con- 
tract is  deemed  to  have  been  terminated. 

1  Corresponds  to  Art.  580,  par.  1,  of  the  German  Commercial 
Code. 

2  Corresponds  to  Art.  583  of  the  German  Commercial  Code. 

3  Corresponds  to  Art.  581,  par.  1,  of  the  German  Commercial 
Code. 


MARINE  COMMERCE.  253 

Article  599.  Even  though  the  charterer  termi- 
nates the  contract  according  to  the  provisions  of 
Art.  598,  he  cannot  be  exempted  from  liability  for 
all  incidental  expenses  and  advances. 

In  a  case  falling  under  Art.  598.  par.  2,  the  char- 
terer, in  addition  to  the  expenses  mentioned  above, 
is  liable  for  contribution  to  general  average,  assist- 
ance and  sauvetage  in  proportion  to  the  value  of  his 
goods. 

Article  600.  After  the  commencement  of  the  voy- 
age, the  charterer  cannot  terminate  the  contract 
unless  he  pays  the  whole  amount  of  freight  and  the 
debt  mentioned  in  Art.  606,  par.  1.  and  either  makes 
compensation  for  the  damage  arising  from  the  dis- 
embarkment  of  the  goods  or  gives  adequate  security. 

Art.  582,  par.  1,  of  the  German  Commercial  Code  is  sub- 
stantially the  same. 

Article  601.  In  case  part  of  the  ship  is  chartered, 
if  the  charterer  terminates  the  contract  before  the 
commencement  of  the  voyage  without  joining  the 
other  charterers  and  shippers,  he  must  pay  the 
whole  amount  of  freight.  But  if  the  shipowner  re- 
ceives any  other  freight  by  making  use  of  the  vacancy, 
such  freight  must  be  deducted. 

If  the  charterer  has  embarked  the  whole  or  part 
of  the  goods,  he  cannot  even  before  the  commence- 
ment of  the  voyage  terminate  the  contract  without 
the  consent  of  the  other  charterers  and  shippers. 

The  provisions  of  Arts.  594-600  are  applicable 
where  part  of  the  ship  is  chartered. 

This  article  is  derived  from  Art.  587  of  the  German  Com- 
mercial Code. 


254  COMMERCIAL  CODE  OF  JAPAN. 

Article  602.  If,  instead  of  chartering  the  whole 
or  part  of  the  ship,  the  goods  are  to  be  loaded  in  a 
general  ship,  the  shipper  must  according  to  the 
order  of  the  captain  embark  the  goods  without  delay. 

If  the  shipper  neglects  to  embark  the  goods,  the 
captain  may  at  once  start  on  the  voyage.  In  such 
case,  the  shipper  must  pay  the  whole  amount  of 
freight.  But  if  the  shipowner  receives  any  other 
freight  by  making  use  of  the  vacancy,  such  freight 
must  be  deducted. 

This  article  corresponds  to  Art.  588,  pars.  1  and  2,  of  the 
German  Commercial  Code. 

Article  603.  The  provisions  of  Art.  601  are  appli- 
cable where  the  shipper  terminates  the  contract. 

Article  604.  A  charterer  or  shipper  must  within 
the  period  of  time  fixed  for  embarkment  furnish  the 
captain  with  all  documents  necessary  for  the  car- 
riage. 

I.e.  The  charter  party,  the  inventory  of  the  goods,   the 
exportation  permit,  the  receipt  of  the  custom  house,  etc. 
Identical  with  Art.  591  of  the  German  Commercial  Code. 

Article  605.  In  case  the  whole  or  part  of  the 
ship  is  chartered,  if  all  preparations  necessary  for 
the  disembarkment  of  the  goods  have  been  com- 
pleted, the  captain  must  without  delay  give  notice 
to  the  consignee. 

If  a  period  of  time  has  been  fixed  for  the  disem- 
barkment of  the  goods,  the  period  begins  to  run  from 
the  next  day  after  such  notice.     If  the  goods  are 


MARINE  COMMERCE.  255 

disembarked  after  the  expiration  of  the  period,  the 
shipowner  may  claim  a  reasonable  compensation  as 
demurrage,  even  though  there  has  been  no  special 
agreement  between  the  parties.1 

The  days  during  which  disembarkment  is  prevented 
by  circumstances  beyond  the  control  of  the  party 
may  be  deducted  from  such  period.2 

If,  instead  of  chartering  the  whole  or  part  of  the 
ship,  the  goods  are  to  be  loaded  in  a  general  ship, 
the  shipper  must  according  to  the  order  of  the  cap- 
tain disembark  the  goods  without  delay. 

1  The  first  two  paragraphs  correspond  to  Art.  594, 
pars.  1,  3  and  6,  of  the  German  Commercial  Code. 

2 Art.  597  of  the  German  Commercial  Code  reads  as  follows: — 

"When  calculation  is  being  made  of  the  time  for  discharge 
and  the  days  of  demurrage,  the  days  will  be  counted  as  follow- 
ing each  other  without  interruption;  Sundays  and  holidays 
will  be  also  counted,  as  well  as  the  days  during  which  the 
consignee  has  been  prevented,  by  unforeseen  circumstances, 
from  taking  delivery  of  the  cargo. 

"However,  days  will  not  be  counted  on  which  through 
wind  or  weather,  or  any  other  accident, — 

"(1)  The  transport  not  only  of  the  cargo  actually  on  the 
ship,  but  every  kind  of  cargo  from  the  ship  on  to  land;   or 

"(2)     Its  unloading  from  the  ship  is  prevented." 

Article  606.  When  the  consignee  receives  the 
goods,  he  is  liable  according  to  the  contract  of  car- 
riage or  the  bill  of  lading  for  the  payment  of  the 
freight,  all  incidental  expenses  and  advances,  and 
for  contribution  to  general  average,  assistance  or 
sauvetage  in  proportion  to  the  value  of  the  goods. 

The  captain  shall  not  deliver  the  goods  unless  on 
payment  of  the  sums  mentioned  above. 


256  COMMERCIAL  CODE  OF  JAPAN. 

This  article  corresponds  to  Art.  614  of  the  German  Com- 
mercial Code. 

Article  607.  If  the  consignee  neglects  to  receive 
the  goods,  the  captain  may  deposit  them.  In  such 
case,  a  notice  thereof  must  be  given  to  the  consignee 
without  delay. 

If  the  consignee  cannot  be  ascertained,  or  he 
refuses  to  receive  the  goods,  the  captain  may  deposit 
them.  In  such  case,  a  notice  thereof  must  be  given 
to  the  charterer  or  shipper  without  delay. 

This  article  corresponds  to  Art.  601  of  the  German  Com- 
mercial Code. 

Article  608.  If  the  freight  has  been  fixed  in  propor- 
tion to  the  weight  or  bulk  of  the  goods,  the  amount 
of  the  freight  is  determined  by  their  weight  or  bulk 
at  the  time  of  delivery. 

Corresponds  to  Art.  620  of  the  German  Commercial  Code. 

Article  609.  If  the  payment  of  the  freight  has 
been  fixed  by  a  period  of  time,  the  amount  of  the 
freight  is  determined  by  the  time  from  the  day  wiien 
the  embarkment  of  the  goods  commences  to  the 
day  when  their  disembarkment  ends.  But  if  the 
ship,  in  case  of  absolute  necessity,  has  been  com- 
pelled to  lie  at  anchor  at  the  port  of  departure  or  in 
the  course  of  the  voyage,  or  to  undergo  repairs  in 
the  course  of  the  voyage,  the  time  spent  in  such 
case  is  not  counted.1  The  same  provision  is  appli- 
cable in  the  case  of  Art.  594,  par.  2,  or  Art.  605, 
par.  2,  to  the  time  spent  in  the  embarkment  or  dis- 


MARINE  COMMERCE.  257 

embarkment  of  the  goods  after  the  expiration  of  the 
period  of  time  fixed  for  such  embarkment  or  dis- 
embarkment.2 

1  Art.  622  of  the  German  Commercial  Code  reads  as  fol- 
lows : — 

"If  freight  has  been  calculated  according  to  time,  it  begins 
to  run,  apart  from  agreement  to  the  contrary,  with  the  day 
following  that  on  which  the  captain  has  given  notice  that  he 
is  ready  to  take  the  cargo,  or  if  it  is  a  question  of  a  voyage 
'on  ballast,'  that  he  is  ready  to  start;  but  if,  in  the  case  of  a 
voyage  'on  ballast,'  notice  has  not  yet' been  given  the  day 
before  that  on  which  the  voyage  has  begun,  freight  begins 
to  run  from  the  day  of  starting. 

"If  compensation  has  been  agreed  upon  for  lay  and  de- 
murrage days,  time  freight  is  only  calculated  in  all  cases  from 
the  day  the  voyage  has  begun. 

"Time  freight  ceases  to  run  on  the  day  on  which  the  dis- 
charge is  finished. 

"If  the  voyage  is  delayed  or  interrupted  without  fault  on 
the  part  of  the  owner,  time  freight  must  be  paid  for  the 
interval  of  time,  without  prejudice  to  the  provisions  of  Arts. 
637  and  638." 

2  Because  in  such  case  the  shipowner  is  already  entitled  to 
demurrage. 

Article  610.  The  shipowner,  in  order  to  obtain 
payment  of  the  sums  mentioned  in  Art.  606,  par.  1, 
may  sell  the  goods  by  auction  with  the  permission  of 
the  court. 

Even  after  the  captain  delivers  the  goods  to  the 
consignee,  the  shipowner  may  still  exercise  his  right 
of  lien  on  the  goods.  But,  after  two  weeks  have 
elapsed  from  the  day  of  delivery  or  if  a  third  person 
has  acquired  the  possession  of  the  goods,  the  ship- 
owner can  no  longer  exercise  such  right. 


258  COMMERCIAL  CODE  OF  JAPAN. 

Art.  623,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  owner  has  a  right  of  lien  on  goods  for  debts  referred 
to  in  Art.  614  (freight  and  other  incidental  expenses,  etc.). 

"The  lien  continues  so  long  as  the  goods  are  held  or  deposited 
and  after  their  delivery,  if  within  thirty  days  after  such  de- 
livery they  are  claimed  before  the  court,  and  the  goods  are 
still  in  possession  of  the  consignee." 

Article  611.  If  the  shipowner  fails  to  exercise 
his  right  mentioned  in  Art.  610,  he  loses  his  right  of 
recourse  against  the  charterer  or  shipper.  But  the 
charterer  or  shipper  must  return  the  profit  he  has 
received. 

Art.  625  of  the  German  Commercial  Code  reads  as  follows : — 
"When  the  owner  has  delivered  the  goods,  he  cannot 
have  recourse  to  the  charterer  for  sums  due  to  him  from 
the  consignee  (Art.  614).  Such  recourse  can  only  be  had  to 
the  extent  that  the  charterer  may  have  benefited  through 
any  damage  sustained  by  the  owner." 

Article  612.  In  case  the  whole  or  part  of  the  ship 
is  chartered,  if  the  charterer  makes  another  contract 
of  carriage  with  a  third  person,  only  the  shipowner 
is  liable  to  the  third  person  for  the  performance  of 
the  sub-contract,  so  far  as  it  lies  within  the  scope  of 
the  duties  of  the  captain.  But  this  provision  does 
not  affect  the  right  mentioned  in  Art.  541 . 

Art.  605  of  the  German  Commercial  Code  provides  that 
when,  at  the  time  of  chartering  the  whole  of  a  ship  or  a  portion 
of,  or  specified  space  in  it,  the  charterer  has  made  under- 
charter  parties  for  a  mixed  cargo,  the  rights  and  duties  of  the 
original  owner  are  subject  to  the  enactments  of  Arts.  594-602. 


MARINE  COMMERCE.  259 

Article  613.  When  the  whole  ship  is  chartered, 
the  contract  is  terminated  in  the  following  cases:1 — 

1.  When  any  of  the  accidents  mentioned  in  Art. 
587,  par.  1,  occurs. 

2.  When  the  goods  are  destroyed  beyond  the 
control  of  the  party. 

If  any  of  the  accidents  mentioned  in  Art.  587, 
par.  1,  occurs  during  the  voyage,  the  charterer  must 
pay  freight  in  proportion  to  the  part  of  the  carriage 
already  performed,  so  far  as  the  amount  of  such 
freight  does  not  exceed  the  value  of  the  existing 
goods.2 

1  Derived  from  Art.  628  of  the  German  Commercial  Code. 

2  Derived  from  Art.  630  of  the  German  Commercial  Code. 

Article  614.  If  the  voyage  or  the  carriage  becomes 
illegal  after  the  making  of  the  contract  of  carriage,  or, 
under  circumstances  beyond  the  control  of  the  party, 
the  performance  of  the  contract  becomes  impos- 
sible, either  party  may  terminate  the  contract.1 

If  any  cause  mentioned  above  occurs  after  the 
commencement  of  the  voyage  and  the  contract  is 
terminated,  the  charterer  shall  pay  freight  in  pro- 
portion to  the  part  of  the  carriage  already  per- 
formed.2 

1  Art.  629  of  the  German  Commercial  Code  reads  as 
follows : — 

1  Either  party  is  entitled  to  withdraw  from  the  contract 
without  being  liable  in  damages, — 

"(1)     If,  before  the  beginning  of  the  voyage — 

"An  embargo  is  put  upon  the  ship,  or  it  is  seized  for  im- 
perial service  or  that  of  a  foreign  power; 


260  COMMERCIAL  CODE  OF  JAPAN. 

"Trade  with  the  port  of  destination  is  forbidden; 

"The  port  of  loading  or  the  port  of  destination  are  in  a 
state  of  blockade; 

"The  exportation  of  goods  such  as  referred  to  in  the  charter 
party  from  the  port  of  loading,  or  their  importation  into  the 
port  of  destination  is  forbidden;  by  an  order  emanating 
from  supreme  authority  an  obstacle  is  put  to  the  departure 
of  the  ship  or  voyage,  or  to  the  delivery  of  the  goods  mentioned 
in  the  charter  party. 

"In  all  these  cases  the  order  emanating  from  supreme 
authority  only  gives  a  right  of  withdrawal  from  the  contract 
if  such  obstacle  is  apparently  not  likely  to  be  of  short  duration. 

"(2)  If,  before  the  beginning  of  the  voyage,  a  war  breaks 
out,  by  reason  of  which  the  ship  or  the  goods  to  be  transported 
by  virtue  of  the  charter  party,  or  both,  cannot  be  considered 
as  free,  and  run  the  risk  of  being  captured." 

2  Corresponds  to  Art.  634,  par.  5,  of  the  German  Commercial 
Code. 

Article  615.  If  any  cause  mentioned  in  Art.  613, 
par.  1,  No.  2,  and  Art.  614,  par.  1,  arises  from  part 
of  the  goods,  the  charterer  may  disembark  such 
part  of  the  goods  and  embark  any  other  goods  in 
their  stead,  provided  that  the  burden  of  the  shipowner 
is  not  increased. 

If  the  charterer  desires  to  exercise  such  right,  he 
must  without  delay  embark  or  disembark  the  goods. 
If  he  neglects  to  do  so,  he  must  pay  the  whole 
amount  of  freight  even  though  only  part  of  the 
goods  is  carried. 

This  article  is  derived  from  Art.  636,  pars.  1,  2  and  3,  of 
the  German  Commercial  Code. 

Article  616.  The  provisions  of  Arts.  613  and  614 
are  applicable  where  part  of  the  ship  is  chartered, 
or  the  goods  are  to  be  loaded  in  a  general  ship.1 


MARINE  COMMERCE.  261 

Even  though  any  cause  mentioned  in  Art.  613, 
par.  1,  No.  2,  and  Art.  614,  par.  1,  arises  from  part 
of  the  goods,  the  charterer  or  shipper  may  terminate 
the  contract.  But  he  must  pay  the  whole  amount  of 
freight.2 

1  Derived  from  Art.  641  of  the  German  Commercial  Code. 

2  Art.  636,  par.  1,  of  the  German  Commercial  Code  reads  as 
follows : — 

"When,  before  the  voyage  has  begun,  a  part  only  of  the 
cargo  is  affected  by  an  accident  and  in  such  a  way  that  had 
it  happened  to  the  entire  cargo  it  would  have  entailed  the 
cancelling  of  the  contract  or  authorized  the  parties  to  with- 
draw from  it,  in  the  terms  of  Arts.  628  and  629,  the  charterer 
has  only  the  right,  either  to  provide  other  goods,  in  place  of 
those  stipulated  in  the  contract,  unless  by  such  transport 
the  position  of  the  owner  is  prejudiced  (Art.  562),  or  to 
withdraw  from  the  contract,  and  be  obliged  to  pay  half  the 
freight  agreed  on  and  other  claims  of  the  owner  (Arts.  580 
and  581)." 

Article  617.  The  shipowner  is  entitled  to  the 
whole  amount  of  freight  in  the  following  cases : — 

1 .  When  the  captain,  according  to  the  provisions 
of  Art.  568,  par.  1,  has  sold  or  pledged  the  cargo. 

2.  When  the  captain,  according  to  the  provisions 
of  Art.  572,  has  made  use  of  the  cargo  for  the  pur- 
pose of  the  voyage. 

3.  When  the  captain,  according  to  the  provi- 
sions of  Art.  641,  has  disposed  of  the  cargo. 

Art.  618,  par.  2,  of  the  German  Commercial  Code  provides 
that  as  to  freight  payable  for  goods  sacrificed  through  general 
average,  its  amount  will  be  determined  by  the  enactments 
on  the  subject  of  general  average. 


262  COMMERCIAL  CODE  OF  JAPAN. 

Article  618.  Any  claim  of  the  shipowner  against 
the  charterer,  shipper,  or  consignee  is  barred  by 
prescription  after  one  year  has  elapsed. 

Article  619.  The  provisions  of  Arts.  328,  336- 
341  and  348,  are  applicable  to  a  shipowner. 

B. — Bills  of  Lading. 

Article  620.  The  captain,  on  the  application  of 
the  charterer  or  shipper,  must  as  soon  as  the  goods 
have  been  embarked  furnish  him  with  a  bill  of  lad- 
ing in  one  or  more  parts. 

Corresponds  to  Art.  642,  par.  1,  of  the  German  Commercial 
Code. 

Article  621.  The  shipowner  may  authorize  a  per- 
son instead  of  the  captain  to  furnish  the  charterer 
or  shipper  with  a  bill  of  lading. 

Corresponds  to  Art.  642,  par.  4,  of  the  German  Commercial 
Code. 

Article  622.  A  bill  of  lading  shall  contain  the 
following  particulars  with  the  signature  of  the  cap- 
tain, or  the  person  acting  instead  of  the  captain: — 

1.  The  name  and  nationality  of  the  ship. 

2.  If  the  captain  does  not  make  the  bill  himself, 
the  name  of  the  captain. 

3.  The  nature,  weight  or  bulk  of  the  goods  and 
the  nature  of  their  packing,  number  and  marks. 

4.  The  name  or  trade  name  of  the  charterer  or 
shipper. 


MARINE  COMMERCE.  263 

5.  The  name  or  trade  name  of  the  consignee,  or 
the  fact  that  the  goods  are  to  be  delivered  to  the 
holder. 

6.  The  port  of  embarkment. 

7.  The  port  of  disembarkment ;  but  if  such  port 
is  to  be  appointed  by  the  charterer  or  shipper  after 
the  commencement  of  the  voyage,  the  port  where 
such  appointment  is  to  be  made. 

8.  The  freight. 

9.  If  the  bill  of  lading  is  drawn  in  several  parts, 
the  number  of  the  parts. 

10.  The  place  where  the  bill  of  lading  is  made 
and  the  date  of  its  making. 

Corresponds  to  Art.  643  of  the  German  Commercial  Code. 

Article  623.  The  charterer  or  shipper,  on  the 
application  of  the  captain  or  the  person  acting  instead 
of  the  captain,  must  sign  a  copy  of  the  bill  and  deliver 
it  to  him. 

Corresponds  to  Art.  642,  par.  3,  of  the  German  Commercial 
Code. 

Article  624.  At  the  port  of  disembarkment,  the 
captain  shall  not  refuse  to  deliver  the  goods,  even 
though  the  delivery  of  the  goods  is  demanded  by  the 
holder  of  one  part  of  a  bill  of  lading  drawn  in  sev- 
eral parts. 

Identical  with  Art.  645,  par.  1,  of  the  German  Commercial 
Code. 

Article  625.  Outside  of  the  port  of  disembark- 
ment, the  captain  shall  not  deliver  the  goods  unless 
all  the  parts  of  a  bill  of  lading  have  been  surrendered. 

Identical  with  Art.  659,  par.  2,  of  the  German  Commercial 
Code. 


264  COMMERCIAL  CODE  OF  JAPAN. 

Article  626.  If  the  delivery  of  the  goods  is  de- 
manded by  two  or  more  holders  of  a  bill  of  lading, 
the  captain  must  without  delay  deposit  the  goods 
and  give  notice  thereof  to  each  holder  who  has 
demanded  such  delivery.  The  same  provision  is 
applicable  where,  after  the  captain  has  delivered 
part  of  the  goods  according  to  the  provision  of 
Art.  624,  any  other  holder  demands  their  delivery. 

Corresponds  to  Art.  646,  par.  1,  of  the  German  Commercial 
Code. 

Article  627.  In  case  there  exist  two  or  more 
holders  of  a  bill  of  lading,  if  the  captain  has  deliv- 
ered the  goods  to  one  holder,  the  bill  of  lading  in 
the  hands  of  any  other  holder  loses  its  effect. 

Article  628.  In  case  there  exist  two  or  more 
holders  of  a  bill  of  lading,  if  the  captain  has  not 
delivered  the  goods,  the  person  who  holds  the  bill 
which  was  first  sent  or  delivered  by  the  original 
holder1  has  a  superior  right  to  any  other  holder.2 

1  "The  original  holder"  means  the  holder  who  wrongfully 
delivered  the  different  parts  of  the  bill  of  lading  to  different 
persons. 

2  Derived  from  Art.  649  of  the  German  Commercial  Code. 

Article  629.  The  provisions  of  Arts.  334,  335, 
455  and  483  are  applicable  to  a  bill  of  lading. 

Sub- Section  2.— Carriage  of  Passengers. 

Article  630.  A  passage  ticket  with  a  name  on  it 
is  not  transferable. 

Corresponds  to  Art.  664  of  the  German  Commercial  Code. 


MARINE  COMMERCE.  265 

Article  631.  The  food  of  the  passengers  is  pro- 
vided by  the  shipowner. 

Article  632.  The  shipowner  cannot  demand 
freight  for  the  baggage  which  a  passenger  is  entitled 
to  bring  on  board  in  accordance  with  his  contract, 
unless  there  is  a  special  agreement  between  the 
parties. 

Identical  with  Art.  672  of  the  German  Commercial  Code. 

Article  633.  If  a  passenger  does  not  embark 
within  the  time  for  embarkment,  the  captain  may 
start  on,  or  continue  the  voyage.  In  such  case,  the 
passenger  must  pay  the  whole  amount  of  the  passage 
money. 

Identical  with  Art.  666  of  the  German  Commercial  Code. 

Article  634.  Before  the  commencement  of  the 
voyage,  a  passenger  may  terminate  the  contract  on 
payment  of  one  half  of  the  passage  money. 

After  the  commencement  of  the  voyage,  the  pas- 
senger cannot  terminate  the  contract  unless  he  pays 
the  whole  amount  of  the  passage  money. 

Art.  667  of  the  German  Commercial  Code  reads  as  follows : — 
"If  a  passenger  withdraws  from  the  contract  before  the 
beginning  of  the  voyage,  or  dies,  or  it  becomes  necessary  for 
him  to  remain  behind  through  illness  or  some  accident 
happening  to  him  personally,  only  half  the  passage  money 
is  owing. 

"If  it  is  after  the  beginning  of  the  journey  that  he  with- 
draws from  the  contract,  or  that  an  accident  such  as  mentioned 
above  happens,  the  whole  of  the  passage  money  must  be 
paid." 


266  COMMERCIAL  CODE  OF  JAPAN. 

Article  635.  If,  before  the  commencement  of  the 
voyage,  the  passenger  cannot  make  the  voyage  on 
account  of  his  death,  illness,  or  any  cause  relating 
to  his  person  beyond  his  control,  the  shipowner  is 
entitled  to  one  fourth  of  the  passage  money. 

If  any  cause  mentioned  above  occurs  after  the 
commencement  of  the  voyage,  the  shipowner  may 
claim  either  one  fourth  of  the  passage  money  or  an 
amount  in  proportion  to  the  part  of  the  voyage 
already  performed. 

See  notes  to  Art.  634,  supra. 

Article  636.  If  the  ship  is  repaired  in  the  course 
of  the  voyage,  the  shipowner,  during  the  time  of 
such  repairs,  must  provide  the  passenger  with  proper 
lodging  and  food.  But  this  provision  is  not  appli- 
cable where  the  shipowner  has  offered  to  carry  the 
passenger  in  another  ship  without  prejudice  to 
the  rights  of  the  passenger. 

Derived  from  Art.  671  of  the  German  Commercial  Code. 

Article  637.  The  contract  of  the  carriage  of  pas- 
sengers terminates  on  the  happening  of  any  cause 
mentioned  in  Art.  587,  par.  1.  But  if  the  cause 
occurs  during  the  voyage,  the  passenger  must  pay 
passage  money  in  proportion  to  the  part  of  the 
voyage  already  performed. 

Corresponds  to  Arts.  668  and  670,  par.  2,  of  the  German 
Commercial  Code. 

Article  638.  When  the  passenger  dies  during  the 
voyage,  the  captain  shall  treat  his  baggage  on  board 
in  such  a  manner  as  is  most  beneficial  to  his  heirs. 

Identical  with  Art.  675  of  the  German  Commercial  Code. 


MARINE  COMMERCE.  267 

Article  639.  The  provisions  of  Arts.  350,  351, 
par.  1,  352,  591,  592,  614  and  618  are  applicable  to 
the  carriage  of  passengers  at  sea. 

The  provisions  of  Art.  593  and  617  are  applicable 
to  the  baggage  of  a  passenger. 

Article  640.  When  the  whole  or  part  of  the  ship 
is  chartered  for  the  purpose  of  carrying  passengers 
the  provisions  of  Arts.  590-619  are  applicable  as  to 
the  relation  between  the  shipowner  and  the  charterer. 

Derived  from  Art.  676  of  the  German  Commercial  Code. 


SECTION  4.— GENERAL  AVERAGE. 

Article  641.  When  the  captain  disposes  of  the 
ship  or  cargo1  with  the  object  of  saving  both  from 
a  common  danger,  any  loss  as  well  as  expense  arising 
therefrom  is  general  average.2 

If  the  danger  is  caused  by  negligence,  the  right  of 
recourse  against  the  wrongdoer  by  the  party  inter- 
ested is  not  affected  by  this  provision.3 

1  Such  disposition  includes  jettison,  voluntary  stranding, 
cutting  away  sails  or  spars,  carrying  press  of  sail,  burning 
cargo,  ship's  materials  and  stores  for  fuel,  etc.  See  York- 
Antwerp  Rules,   1890. 

2  Corresponds  to  Art.  700,  par.  1,  of  the  German  Commercial 
Code. 

3  In  such  case,  the  party  whose  property  has  been  sacrificed 
may  at  his  option  either  claim  damage  from  the  wrongdoer 
or  claim  a  contribution  from  the  shipowner  or  owner  of  the 
goods.  After  a  contribution,  the  contributors  have  a  right  of 
recourse  against  the  wrongdoer. 


268  COMMERCIAL  CODE  OF  JAPAN. 

Art.  702  of  the  German  Commercial  Code  reads  as  follows: 

"The  application  of  the  enactments  concerning  general 
average  will  not  be  prevented  by  the  fact  that  the  danger 
was  brought  about  through  the  fault  of  a  third  person  or 
even  a  person  interested. 

"An  interested  person  who  has  commited  such  fault  can 
nevertheless  not  only  demand  no  compensation  for  damages 
which  he  has  sustained,  but  is  besides  answerable  to  those 
obliged  with  him  to  contribute  to  general  average,  for  the 
damage  sustained  by  them  through  the  fact  that  compensa- 
tion is  to  be  paid  as  general  average. 

"If  the  danger  is  incurred  through  a  member  of  the  ship's 
crew,  the  owner  is  answerable  for  the  consequences  in  accord- 
ance with  Arts.  485  and  486." 

Article  642.  Each  party  interested  is  liable  for 
contribution  to  general  average  according  to  the 
proportion  of  the  value  of  the  ship  or  cargo  that  has 
been  saved,  one  half  of  the  amount  of  the  freight 
and  passage  money,1  and  the  amount  of  general 
average.2 

1  The  law  presumes  that  one  half  of  the  amount  of  the 
freight  and  passage  money  is  the  net  profit  of  the  shipowner. 
Since  so  much  profit  is  saved  by  general  average,  it  is  reason- 
able that  the  very  same  profit  is  liable  to  contribution. 

2  For  example:  The  value  of  the  ship  is  5,000,000  yen. 
The  value  of  the  cargo  is  1,000,000  yen.  The  total  amount 
of  freight  and  passage  money  is  100,000  yen.  When  the  ship 
was  in  danger  at  sea,  the  captain,  in  order  to  lighten  the 
ship,  threw  overboard  a  part  of  the  cargo  which  cost  400,000 
yen.    The  average  adjustment  is  as  follows : — 

5,000,000  ^.=the  value  of  the  ship. 
1,000,000     =the  value  of  the  cargo. 

50,000     =%  of  the  freight  and  passage  money. 
6,050,000  3/.=total  amount  liable  for  the  general  average. 


MARINE  COMMERCE.  269 

The  amount  of 
general  average 

400,000  x  5,000,000  =  the  amount    for   which    the   ship    is 
6,050,000  liable. 

400,000  x  1,000,000  =__  the  amount  for   which   the    cargo   is 
6,050,000  "  liable. 

400,000  x  50,000  __  the  amount  for  which  the  profit  of  the 
6,050,000  "  owner  is  liable. 

400,000  x 400,000  x  l.QOO.OCC        the  amount  for  which  the 


1,000,000  6,050,000  sacrificed    cargo    itself    is 

liable. 

600,000  x  400,000  x  1,000,000        the  amount  for  which  the 


1,000,000  6,050,000  saved  cargo  is  liable. 

Arts.  716  and  721  of  the  German  Commercial  Code  read  as 
follows : — 

"Art.  716.  The  total  damage  which  comes  under  general 
average  must  be  distributed  over  the  ship,  cargo,  and  freight 
in  proportion  to  the  value  of  ship  and  cargo  and  the  amount 
of  the  freight. 

"Art.  721.  Freight  contributes  to  the  extent  of  two 
thirds, — 

"1.     Of  the  gross  amount  earned; 

"2.  Of  the  amount  which  in  accordance  with  Art.  715 
(compensation  for  lost  freight)  is  brought  into  account  as 
general  average. 

"Passage  money  contributes  to  the  amount  of  the  reduc- 
tion which  would  result  in  case  of  loss  of  the  ship  (Art.  670), 
after  deduction  of  expenses,  which  would  in  such  event  be 
spared." 

Article  643.  On  the  calculation  of  the  amount  of 
contribution  to  general  average  for  which  the  saved 
ship  or  cargo  is  liable,  the  value  of  the  ship  is  deter- 


270  COMMERCIAL  CODE  OF  JAPAN. 

mined  by  its  value  at  the  place  and  time  of  arrival 
and  the  value  of  the  cargo  is  determined  by  its  value 
at  the  place  and  time  of  disembarkment ;  but  as  to 
the  cargo,  the  freight  and  other  expenses  which  need 
not  be  paid  in  case  of  loss1  must  be  deducted  from 
such  value.2 

^he  loss  spoken  of  is  the  loss  of  the  cargo  through  any- 
other  accident  after  the  cargo  is  once  saved.  It  is  a  loss  falling 
under  Art.  336  on  account  of  which  the  carrier  is  not  entitled 
to  freight. 

2  Derived  from  Arts.  717-719  of  the  German  Commercial 
Code. 

Article  644.  Any  person  who  is  liable  for  con- 
tribution to  general  average  under  Arts.  642  and  643 
is  only  responsible  to  the  extent  of  the  existing 
value  of  the  ship  at  the  time  of  its  arrival  or  of  the 
cargo  at  the  time  of  its  delivery. 

Derived  from  Art.  726,  par.  1,  of  the  German  Commercial 
Code. 

Article  645.  The  arms  of  the  ship,  the  wages  of 
the  crew  and  the  food  and  clothing  of  the  crew  and 
the  passengers  are  not  liable  for  contribution  to 
general  average;  but  if  these  things  are  sacrificed 
on  account  of  general  average,  the  other  parties 
interested  are  liable  for  contribution. 

Corresponds  to  Art.  723,  pars.  1  and  2,  of  the  German 
Commercial  Code. 

Article  646.  If  goods  embarked  without  a  bill  of 
lading  or  any  other  documents  for  the  assessment 


MARINE  COMMERCE.  271 

of  the  value  of  the  cargo,  or  appurtenances  of  the 
ship  which  have  not  been  entered  in  the  ship's 
inventory,  are  sacrificed  on  account  of  general 
average,  the  other  parties  interested  are  not  liable 
for  contribution. 

This  provision  is  applicable  where  the  deck  cargo 
is  sacrificed,  except  in  the  case  of  short  voyages 
along  the  coast. 

The  parties  interested  in  the  cargo  mentioned  in 
the  last  two  paragraphs  cannnot  be  exempted  from 
liability  for  contribution  to  general  average. 

This  article  corresponds  to  Arts.  708  and  723,  par.  5, 
of  the  German  Commercial  Code. 

Art.  723,  par.  3,  of  the  German  Commercial  Code  provides 
that  no  compensation  is  paid  for  jewelry,  objects  of  art, 
money,  or  valuables,  unless  specially  explained  to  the  captain. 

Article  647.  On  the  calculation  of  the  amount  of 
general  average,  the  value  of  the  ship  is  determined 
by  its  value  at  the  place  and  time  of  arrival  and  the 
value  of  the  cargo  is  determined  by  its  value  at  the 
place  and  time  of  disembarkment ;  but  as  to  the 
cargo,  all  expenses  which  need  not  be  paid  on 
account  of  loss  or  damage  must  be  deducted  from 
such  value. 

Thus,  the  basis  of  calculation  is  the  same  as  the  calculation 
of  the  amount  of  contribution  to  general  average  for  which 
the  saved  ship  or  cargo  is  liable,  except  that  in  this  article 
only  expenses,  and  not  freight,  must  be  deducted  from  the 
value  of  the  cargo ;  because,  when  the  goods  are  lost  through 
general  average,  the  shipowner  is  still  entitled  to  the  freight. 
See  Art.  617,  No.  3,  supra. 

Derived  from  Arts.  711  and  712  of  the  German  Commercial 
Code. 


272  COMMERCIAL  CODE  OF  JAPAN. 

Article  648.  If  the  value  of  the  cargo  designated 
in  bills  of  lading  or  any  other  documents  for  the 
assessment  of  the  value  of  the  cargo  is  lower  than 
its  actual  value,  the  amount  of  loss  caused  to 
the  cargo  is  determined  by  the  lower  value  thus 
designated. 

If  the  value  of  the  cargo  designated  is  higher  than 
its  actual  value,  the  parties  interested  in  the  cargo 
are  liable  for  contribution  to  general  average  accord- 
ing to  the  higher  value  thus  designated. 

The  provisions  of  the  last  two  paragraphs  are 
applicable  where  there  is  a  false  statement  in  regard 
to  matters  affecting  the  value  of  the  cargo. 

Article  649.  If  the  owner  of  the  ship,  the  appur- 
tenances or  the  cargo  recovers  what  he  has  lost  after 
a  contribution  to  general  average  has  been  made 
by  the  parties  interested  according  to  the  provi- 
sion of  Art.  642,  he  shall  return  the  amount  of  con- 
tribution he  has  received  after  deducting  from  that 
amount  all  expenses  for  salvage  and  the  amount  of 
damage  resulting  from  a  partial  loss  or  damage. 

The  provision  of  the  German  Commercial  Code  similar  to 
this  article  is  as  follows: — 

"Art.  720.  If  goods  are  thrown  away  and  then  salved, 
they  have  not  to  contribute  to  general  average  taking  place 
at  the  same  time  or  later,  except  when  their  owner  claims 
compensation." 

Article  650.  If  two  ships  come  into  collision 
through  the  fault  of  the  crews  of  both  ships  and  it 
cannot  be  ascertained  which  party  is  more  to  blame, 


MARINE  COMMERCE.  273 

the   owners   of   both    ships    are   equally   liable    for 
the  damage  caused  by  such  collision. 

If  it  can  be  ascertained  that  one  party  is  more  in  fault, 
the  parties  will  be  liable  for  the  total  amount  of  loss  in  pro- 
portion to  the  degree  of  their  fault  in  accordance  with 
the  decision  made  by  the  International  Commercial-Law 
Conference  held  in  Brussels  in  1888  and  1895.  This  decision 
is  adopted  by  the  German  Commercial  Code  as  well  as  the 
Japanese  Code.  If  the  cause  of  the  collision  is  unknown,  each 
ship  will  bear  its  own  loss  and  neither  party  can  claim  dam- 
ages. 

Art.  735  of  the  German  Commercial  Code  reads  as  follows : — 

"If  the  accident  arises  through  no  fault  of  the  members 
of  the  crew  of  either  ship,  no  repair  of  the  damage  caused 
may  be  demanded  from  either  ship  or  both  of  them  together. 

"When  the  collision  has  occurred  owing  to  the  fault  of  both 
parties,  the  obligation  to  make  compensation  and  the  amount 
of  damage  to  be  paid  must  depend  upon  circumstances,  and 
especially  on  the  fact  of  knowing  up  to  what  point  the  colli- 
sion occurred  more  through  the  fault  of  the  members  of  one 
of  the  crews  than  that  of  the  members  of  the  other." 

Article  651.  Any  claim  arising  from  general  aver- 
age or  the  collision  of  ships  is  barred  by  prescription 
after  one  year  has  elapsed. 

In  case  of  general  average,  the  period  mentioned 
above  begins  to  run  from  the  completion  of  the 
average  adjustment. 

Art.  904  of  the  German  Commercial  Code  reads  as 
follows  :— 

"Claims  for  charges  upon  goods  for  money  lent  on  bottomry, 
contributions  for  general  average,  expenses  of  salvage  and 
help,  as  well  as  the  personal  rights  to  which  such  sums, 
contributions,  and  expenses  have  given  rise,  are  lost  after 
one  year. 


274  COMMERCIAL  CODE  OF  JAPAN. 

"Prescription,  for  contributions  to  general  average,  from 
the  end  of  the  year  in  which  the  goods  subject  to  such  con- 
tribution have  been  delivered;  for  other  claims,  from  the 
end  of  the  year  in  which  they  become  enforceable." 

Article  652.  The  provisions  of  Arts.  641-651  are 
applicable  to  expenses  which  are  incurred  when  the 
ship  in  case  of  absolute  necessity  is  compelled  to 
lie  at  anchor  at  the  port  of  departure  or  in  the 
course  of  the  voyage. 

Any  expense  falling  under  this  article  is  known  as  quasi 
general  average,  though  its  nature  is  similar  to  that  of  par- 
ticular average  or  accustomed  average,  yet  all  parties  in- 
terested are  liable  for  contribution  thereto. 

Derived  from  Art.  635  of  the  German  Commercial  Code. 


SECTION  5.— MARINE  INSURANCE. 

Article  653.  A  contract  of  marine  insurance  is  a 
contract  made  for  the  purpose  of  indemnifying  any 
loss  caused  by  accidents  relating  to  a  voyage  at  sea. 

The  provisions  of  Arts.  384-418  are  applicable  to  a 
contract  of  marine  insurance,  unless  there  are  special 
provisions  in  the  present  section. 

Article  654.  The  insurer  is  responsible  for  any 
loss  to  the  subject-matter  during  the  continuance  of 
insurance  caused  by  accidents  relating  to  the  voyage, 
unless  there  are  special  provisions  in  the  present 
section  or  in  the  contract  of  insurance. 

Art.  820  of  the  German  Commercial  Code  reads  as  follows : — 
'The  insurer  takes  all  the  risks  to  which  the  ship  or  cargo 
is  exposed  during  the  insurance,  unless  the  following  enact- 
ments or  the  contract  decide  otherwise: — 


MARINE  COMMERCE.  275 

"He  especially  takes, — 

"(1)  The  risks  run  from  the  elements  and  such-like  mari- 
time accidents,  even  when  they  are  caused  by  the  fault  of  a 
third  person,  such  as  leakage,  stranding,  shipwreck,  sinking, 
fire,  explosion,  lightning,  earthquake,  damages  brought 
about  by  ice,  etc.; 

"(2)      The  risks  of  war  and  orders  of  the  authorities; 

"(3)  The  risks  of  seizure  in  execution  on  the  request  of  a 
third  person  without  any  fault  on  the  part  of  the  assured; 

"(4)  The  risks  of  theft,  as  well  as  danger  from  piracy, 
pillage  and  other  deeds  of  violence; 

"(5)  The  risks  of  a  bottomry  bond  being  given  on  the 
insured  goods  for  the  continuation  of  the  voyage,  or  the 
disposal  of  the  goods  by  sale  or  by  any  employment  of  them 
for  the  same  object; 

1 '  (6)  The  risks  run  through  the  disloyalty  or  the  fault  of  a 
member  of  the  crew,  if  any  damage  happens  therefrom  to 
the  thing  insured; 

"  (7)  The  risks  of  collision,  it  making  no  difference  whether 
the  assured,  on  account  of  such  collision,  has  directly  suffered 
damage,  or  indirectly,  by  the  fact  that  he  is  obliged  to  repair 
the  damage  caused  to  some  third  person." 

Article  655.  The  insurer  is  responsible  for  the 
amount  of  contribution  to  general  average  to  be 
paid  by  the  insured;1  but  if  part  of  the  insurable  inter- 
est has  been  insured,  the  insurer  is  responsible  for  the 
loss  according  to  such  proportion  as  the  sum  insured 
bears  to  the  value  of  the  subject-matter.2 

1  Corresponds  to  Art.  834,  No.  1,  of  the  German  Commercial 
Code. 

2  See  notes  to  Art.  391,  supra. 

Article  656.  When  an  insurance  is  effected  on  a 
ship,  the  insurable  interest  is  the  value  of  the  ship 


276  COMMERCIAL  CODE  OF  JAPAN. 

at  the  time  when  the  risk  of  the  insurer  begins  to 
run. 

The  policy  contemplated  by  this  article  and  the  next  two 
articles  is  an  open  policy;  that  is,  the  insurable  interest  is 
not  fixed  therein.  In  case  of  a  valued  policy,  the  value 
of  the  subject-matter  fixed  therein  is  binding  on  the  parties 
except  that  when  the  value  is  greatly  exaggerated,  the  insurer 
may  demand  a  reduction  of  the  amount  of  indemnity.  See 
Art.  394,  supra. 

Art.  795  of  the  German  Commercial  Code  provides  that 
the  value  which  the  ship  possessed  at  the  time  the  risk 
began  to  run  for  the  insurer,  is  to  be  considered  the  insurance 
value  of  the  ship,  unless  the  parties  have  agreed  upon  another 
basis  for  their  estimate. 

Article  657.  When  an  insurance  is  effected  on  the 
cargo,  the  insurable  interest  is  the  value  of  the 
goods  at  the  place  and  time  of  embarkment  together 
with  the  expenses  arising  from  such  embarkment 
and  insurance. 

Because,  the  total  amount  of  such  value  and  such  expenses 
is  the  approximate  value  of  the  goods  at  the  place  of  arrival, 
and  in  case  of  loss  such  amount  is  the  very  interest  which  the 
insured   loses. 

Art.  799,  pars.  1  and  2,  of  the  German  Commercial  Code 
reads  as  follows: — 

"The  insurance  value  of  goods  is  the  value  they  possessed 
at  the  place  and  time  of  loading,  including  all  expenses  till 
they  are  actually  on  board,  unless  the  parties  have  agreed 
upon  another  basis  of  valuation. 

"Freight,  and  expenses  incurred  during  the  voyage  and  at 
the  place  of  destination,  are  not  to  be  added,  unless  it  has 
been  specially  agreed  so." 

Article  658.  When  an  insurance  is  effected  on  any 
profit  or  compensation  to  be  received  on  the  arrival 


MARINE  COMMERCE.  277 

of  the  goods,  the  sum  insured  is  presumed  to  be  the 
insurable  interest,  if  it  has  not  been  fixed  by  contract. 

Identical  with  Art.  802  of  the  German  Commercial  Code. 


Article  659.  When  an  insurance  is  effected  on  a 
ship  for  a  voyage,  the  risk  of  the  insurer  begins  to 
run  as  soon  as  the  embarkment  of  the  cargo  or 
ballast  takes  place. 

When  an  insurance  is  effected  on  a  ship  after  the 
embarkment  of  the  cargo  or  ballast,  the  risk  of  the 
insurer  begins  to  run  as  soon  as  the  contract  of 
insurance  is  completed. 

In  the  cases  mentioned  above,  the  risk  of  the 
insurer  ends  as  soon  as  the  disembarkment  of  the 
cargo  or  ballast  at  the  port  of  destination  is  com- 
pleted; but  if  the  disembarkment  is  delayed,  except 
in  case  of  absolute  necessity,  the  risk  ends  at  the 
time  when  such  disembarkment  should  have  been 
completed. 

This  article  is  identical  with  Art.  823,  pars.  1  and  2,  of  the 
German  Commercial  Code,  except  that  the  latter,  instead 
of  providing  that  when  an  insurance  is  effected  on  a  ship 
after  the  embarkment  of  the  cargo  or  ballast  the  risk  of 
the  insurer  begins  to  run  as  soon  as  the  contract  of  insurance 
is  completed,  provides  that  if  there  is  no  cargo  or  ballast  to 
load  the  risk  runs  for  the  insurer  from  the  moment  when 
the  ship's  departure  begins. 

Article  660.  When  an  insurance  is  effected  on  the 
cargo,  or  any  profit  or  compensation  to  be  received 
on  the  arrival  of  the  cargo,  the  risk  of  the  insurer 
begins  to  run  as  soon  as  the  cargo  leaves  the  land 


278  COMMERCIAL  CODE  OF  JAPAN. 

and  ends  as  soon  as  the  disembarkment  of  the  cargo 
at  the  port  of  disembarkment  is  completed.1 

In  such  case,  if  the  disembarkment  is  delayed, 
except  in  case  of  absolute  necessity,  the  risk  ends  at 
the  time  when  such  disembarkment  should  have 
been  completed.2 

1  If  the  goods  are  lost  after  they  have  been  transferred 
to  a  lighter  but  before  they  have  been  moved  to  the  land,  the 
insurer  is  still  responsible  for  such  loss. 

2  This  article  is  identical  with  Art.  824,  pars.  1  and  2,  of 
the  German  Commercial  Code. 

Article  661.  In  addition  to  the  particulars  men- 
tioned in  Art.  403,  par.  2,  a  policy  of  marine  insur- 
ance shall  contain  the  following  facts : — 

1.  When  the  insurance  is  effected  on  the  ship, 
the  name,  nationality  and  class  of  the  ship,  the 
name  of  the  captain,  and  the  ports  of  departure  and 
destination  or  any  port  at  which  the  ship  is  to  lie 
at  anchor. 

2.  When  the  insurance  is  effected  on  the  cargo  or 
any  profit  or  recompense  to  be  received  on  the  arrival 
of  the  cargo,  the  name,  nationality  and  class  of  the 
ship,  and  the  ports  of  embarkment  and  disembark- 
ment. 

Article  662.  If  the  voyage  is  changed  before  the 
risk  of  the  insurer  begins  to  run,  the  contract  of 
insurance  loses  its  effect. 

If  the  voyage  is  changed  after  the  risk  of  the 
insurer  begins  to  run,  the  insurer  is  not  responsible 
for  any  accident  happening  after  such  change,  except 


MARINE  COMMERCE.  279 

the  said  change  is  not  caused  by  the  fault  of  the 
preneur  or  the  insured. 

If  the  port  of  destination  is  changed  and  such 
change  has  actually  taken  place,  the  voyage  is  con- 
sidered to  have  been  changed  even  though  the  ship 
has  not  deviated  from  the  original  route. 

This  article  corresponds  to  Art.  813  of  the  German  Com- 
mercial Code. 

Article  663.  If  the  insured  neglects  to  start  on  or 
continue  the  voyage,  or  changes  the  original  route, 
or  acts  in  any  other  way  by  which  the  risk  is  greatly 
changed  or  increased,  the  insurer  is  not  responsible 
for  any  accident  happening  after  such  change  or 
increase,  unless  the  said  change  or  increase  has  no 
influence  on  the  happening  of  the  accident  or  arises 
from  an  unavoidable  circumstance  under  which  the 
insurer  must  be  liable  or  from  a  reasonable  cause. 

Corresponds  to  Art.  814  of  the  German  Commercial  Code. 

Article  664.  Even  though  the  name  of  the  cap- 
tain has  been  designated  in  the  policy  of  marine 
insurance,  the  change  of  the  captain  does  not  affect 
the  validity  of  the  policy. 

Corresponds  to  Art.  815  of  the  German  Commercial  Code. 

Article  665.  When  an  insurance  is  effected  on  the 
cargo  or  any  profit  or  compensation  to  be  received 
on  the  arrival  of  the  cargo,  if  the  ship  is  changed 
the  insurer  is  not  responsible  for  any  accident  hap- 
pening after  such  change,  unless    the  said  change 


280  COMMERCIAL  CODE  OF  JAPAN. 

is.  not  caused  by  the  fault  of  the  preneur  or  the 
insured. 

Corresponds  to  Art.  816  of  the  German  Commercial  Code. 

Article  666.  If  the  ship  in  which  the  goods  are 
to  be  loaded  is  not  designated  in  the  contract  of 
insurance,  the  preneur  or  insured,  as  soon  as  he 
knows  that  the  goods  have  been  embarked  on 
board,  must  give  notice  of  the  name  and  nationality 
of  the  ship  to  the  insured. 

If  the  preneur  or  insured  neglects  to  give  such 
notice,  the  contract  of  insurance  will  lose  its  effect. 

This  article  corresponds  to  Art.  817  of  the  German  Com- 
mercial Code. 

Article  667.  The  insurer  is  not  responsible  for  the 
following  losses  or  expenses : — 

1.  Any  loss  caused  by  the  nature  or  the  defects 
of  the  subject-matter  or  by  its  natural  wear  and 
tear  or  by  the  malicious  intention  or  gross  negli- 
gence of  the  preneur  or  the  insured. 

2.  When  an  insurance  is  effected  on  the  ship  or 
freight,  any  loss  caused  by  the  fact  that  at  the  com- 
mencement of  the  voyage  the  necessary  preparations 
for  the  voyage  had  not  been  made  or  the  necessary 
documents  had  not  been  kept. 

3.  When  an  insurance  is  effected  on  the  cargo 
or  any  profit  or  compensation  to  be  received  on  the 
arrival  of  the  cargo,  any  loss  caused  by  the  malicious 
intention  or  gross  negligence  of  the  charterer,  shipper, 
or  consignee. 


MARINE  COMMERCE.  281 

4.  Pilotage,  port  dues,  quarantine  fees  and  any 
other  ordinary  expenses  incurred  for  the  voyage  in 
regard  to  the  ship  or  cargo. 

This  article  is  derived  from  Art.  821  of  the  German  Com- 
mercial Code. 

Article  668.  The  insurer  is  not  responsible  for 
any  loss  or  expense  other  than  general  average,  if 
the  amount  of  such  loss  or  expense  does  not  exceed 
two  per  cent  of  the  insurable  interest  exclusive  of 
the  costs  of  adjustment.1 

If  the  amount  of  such  loss  or  expense  exceeds  two 
per  cent  of  the  insurable  interest,  the  insurer  must 
pay  the  whole  amount  without  deducting  two  per 
cent. 

The  provisions  of  the  previous  paragraphs  are 
applicable  where  it  is  fixed  in  the  contract  of  insur- 
ance that  the  insurer  shall  not  be  liable  for  a  certain 
percentage  of  the  loss  or  expense.2 

The  percentage  fixed  by  this  article  must  be 
counted  for  each  voyage  separately.3 

^he  insurer  is  not  responsible  for  such  small  amount, 
since  the  amount  of  the  costs  for  adjustment  may  be  far 
greater  than  two  per  cent  of  the  loss.  But  in  case  of 
general  average,  he  must  be  liable  for  an  amount  of  con- 
tribution not  exceeding  two  per  cent,  because  in  such 
case  an  average  adjustment  always  takes  place  for  all  the 
parties  interested. 

2  Thus,  if  it  is  provided  in  the  contract  of  insurance  that  the 
insurer  shall  not  be  liable  for  an  amount  of  loss  not  exceeding 
three  per  cent  of  the  insurable  interest,  the  insurer  is  still 
liable  for  three  per  cent  in  case  of  general  average  according 
to  the  first  paragraph  of  this  article;    and  if  the  amount  of 


282  COMMERCIAL  CODE  OF  JAPAN. 

loss  exceeds  three  per  cent,  he  is  liable  for  the  whole  amount 
of  loss  without  deducting  three  per  cent  according  to  the 
second   paragraph. 

3  This  article  is  identical  with  Arts.  845,  846  and  847  of  the 
German  Commercial  Code,  except  that  the  percentage  fixed 
by  the  latter  is  three  per  cent  instead  of  two  per  cent. 

Article  669.  If  the  insured  cargo  arrives  at  the 
port  of  disembarkment  in  a  damaged  condition,  the 
insurer  is  liable  for  part  of  the  insurable  interest 
bearing  such  ratio  to  the  sum  insured  as  the  amount 
of  loss  bears  to  the  value  which  the  cargo  would 
have  should  it  arrive  safe  and  sound. 

For  instance:  The  insurable  interest  of  the  cargo  is 
$10,000.  If  it  arrive  safe  and  sound,  it  would  be  worth  $12,000 
at  the  port  of  destination.  But  the  cargo  is  greatly  damaged 
and  is  only  worth  $4,000.  The  amount  of  loss  is  $8,000. 
Thus,  the  insurer  must  be  liable  for  a  sum  bearing  such  ratio 
to  the  sum  $10,000  insured,  as  the  amount  of  loss,  $8,000, 
bears  to  the  value,  $12,000,  which  the  cargo  would  have 
had,  had  it  arrived  safe  and  sound. 

Art.  875  of  the  German  Commercial  Code  reads  as  follows : — 

"So  far  as  goods  which  have  arrived  in  a  damaged  condition 
at  their  port  of  destination  are  concerned,  a  percentage  of 
the  value  they  have  lost  must  be  fixed,  taking  for  basis  of 
comparison  the  gross  value  they  possess  at  such  port,  in  their 
damaged  condition,  and  the  gross  value  they  would  have  if 
they  had  not  been  damaged. 

"The  amount  of  damage  consists  in  the  same  percentage 
on  the  insurance  value. 

"The  assessment  of  the  value  possessed  by  the  goods  in 
their  damaged  condition  is  effected  by  public  sale,  or,  if  the 
insurer  consents  to  it,  by  means  of  a  valuation.  The  value 
goods  would  have  if  not  damaged  is  determined  by  Art.  611, 
par.  1,  (i.e.  their    current  commercial   value,  or  the  current 


MARINE  COMMERCE.  283 

value  that  goods  of  the  same  kind  possess  at  their  place  of 
destination  at  the  beginning  of  the  ship's  discharging,  or 
at  the  time  of  its  arrival). 

"The  insurer  has,  besides  this,  to  bear  the  cost  of  inspection, 
valuation  and  sale." 

Article  670.  If,  in  case  of  absolute  necessity,  the 
insured  cargo  is  sold  in  the  course  of  the  voyage, 
the  insurer  is  liable  for  the  difference  between  the 
insurable  interest  and  the  purchase  price  after  de- 
ducting from  such  price  the  freight  and  other 
expenses.  But  if  the  insurance  is  effected  on  part 
of  the  insurable  interest,  the  application  of  the  pro- 
vision of  Art.  391  is  not  affected. 

In  such  case,  if  the  vendee  fails  to  pay  the  pur- 
chase price,  the  insurer  is  liable  for  the  payment. 
When  the  price  is  paid  by  the  insurer,  he  acquires 
the  rights  of  the  insured  against  the  vendee. 

This  article  corresponds  to  Art.  877  of  the  German 
Commercial  Code. 

Article  671.  The  insured  may  abandon  the  sub- 
ject-matter to  the  insurer  and  require  him  to  pay 
the  whole  sum  insured,1 — 

1 .  When  the  ship  sinks ; 

2.  When  the  ship  is  missing; 

3.  When  the  ship  becomes  unrepairable;2 

4.  When  the  ship  or  cargo  is  captured; 

5.  When  the  ship  is  taken  by  public  authorities 
and  not  acquitted  for  six  months. 

Derived  from  Art.  861  of  the  German  Commercial  Code, 
in  which  it  is  provided  that  the  insured  may  abandon, — 
"1.     When  the  ship  is  missing; 


284  COMMERCIAL  CODE  OF  JAPAN. 

"2  When  the  thing  insured  is  menaced  by  some  danger 
through  the  ship  and  goods  being  under  embargo,  captured 
by  a  belligerent  power,  arrested  in  any  other  manner  by  order 
of  the  supreme  authority,  or  taken  by  pirates,  and  not  been 
released  for  a  space  of  six,  nine,  or  twelve  months,  according 
as  the  capture,  arrest,  or  taking  have  taken  place : — 

"(a)  In  a  European  port  or  European  sea,  including  all 
the  ports  or  inlets  of  the  Mediterranean,  Black  or  Azov 
seas ;    or 

"(b)  In  other  waters,  but  on  this  side  of  the  Cape  of  Good 
Hope  and  Cape  Horn;   or 

"(c)  In  other  waters  beyond  one  or  the  other  of  these 
capes." 

2  According  to  Art.  873  of  the  German  Commercial  Code, 
the  insured  may  sell  such  ship  and  require  the  insurer  to  pay 
the  difference  between  the  net  loss  and  the  insurance  value. 
In  such  case  the  insurer  is  also  liable  for  the  purchase  price 
upon  default  of  the  vendee. 

Article  672.  If  it  cannot  be  ascertained  for  six 
months  whether  the  ship  is  in  existence,  the  ship 
is  considered  to  be  missing. 

In  case  the  duration  of  the  insurance  contract 
has  been  fixed,  the  insured  may  abandon  the  ship, 
even  if  the  fixed  period  has  expired  during  the  said 
six  months.  But  if  it  is  proved  that  the  ship  was 
not  lost  during  such  fixed  period,  the  abandonment 
will  have  no  effect. 

Art.  862  of  the  German  Commercial  Code  reads  as  follows : — 

"A  ship  which  has  begun  a  voyage  is  considered  as  missing 

if  it  has  not  reached  its  port  of  destination  before  the  time 

after  which  it  is  to  be  considered  as  missing,  and  that  during 

such  time  those  interested  in  it  have  received  no  news  of  it. 

"The  time  after  which  it  is  to  be  considered  as  missing  is, — 

"1.     If  the  port  of  departure  and  the  port  of  destination 


MARINE  COMMERCE.  285 

is  a  European  one,  six  months  for  sailing  ships  and  four 
months  for  steam  ships; 

"2.  If  either  only  the  port  of  departure  or  only  the  port 
of  destination  is  outside  Europe,  and  on  this  side  of  the  Cape 
of  Good  Hope  and  Cape  Horn,  nine  months  for  sailing  or 
steamships;  if  beyond  either  of  such  capes,  twelve  months 
for  either  sailing  or  steam  ships; 

"3.  When  both  the  port  of  the  departure  and  the  port 
of  destination  are  outside  Europe,  six,  nine,  or  twelve  months 
for  both  sailing  and  steam  ships,  according  to  whether  the 
time  required  for  the  voyage  is  not  over  two  or  three  months 
or  more  than  three  months. 

"In  case  of  doubt  the  longer  time  must  be  given." 

Again,  Art.  863  of  the  same  Code  provides  that  the  time 
at  the  expiration  of  which  a  ship  will  be  considered  missing 
begins  to  run  from  the  day  on  which  it  begins  its  voyage. 
If,  however,  news  has  arrived  of  it  since  its  departure,  such 
time  begins  to  run  from  the  day  on  which  news  was  last 
received  of  it,  if  the  ship  has  left  the  place  where  it  was  after 
the  last  authentic  news  was  obtained  of  it. 

Article  673.  If  the  captain  uses  another  ship  to 
carry  the  cargo  as  soon  as  the  ship  becomes  unre- 
pairable, the  insured  can  no  longer  abandon  the  cargo. 

Article  674.  If  the  insured  intends  to  abandon 
the  subject-matter,  he  must  within  three  months 
give  notice  thereof  to  the  insurer. 

In  cases  falling  under  Art.  671,  Nos.  1,  3  and  4,  the 
period  of  time  mentioned  above  begins  to  run  from 
the  time  when  the  insured  has  knowledge  of  the 
cause. 

In  case  of  re-insurance,  the  time  mentioned  above 
begins  to  run  from  the  time  when  the  re-insured 
receives  notice  of  abandonment  from  his  insured. 


286  COMMERCIAL  CODE  OF  JAPAN. 

Art.  864  of  the  German  Commercial  Coae  reads  as  follows : — 

"Notice  of  abandonment  must  be  given  to  the  insurer 
within  the  time  prescribed. 

"The  time  for  giving  such  notice  of  abandonment  is  six 
months,  when,  in  the  case  of  a  ship  considered  missing,  the 
port  of  destination  is  a  European  port;  and  when,  in  the  case 
of  capture  and  arrest,  the  accident  has  happened  in  a  Euro- 
pean port  or  European  sea,  including  all  the  ports  and  inlets 
of  the  Mediterranean  Sea,  Black  Sea,  or  Sea  of  Azov. 

"In  other  cases,  notice  of  abandonment  is  nine  months. 

"Notice  of  abandonment  begins  with  the  expiration  of  the 
periods  of  time  mentioned  in  Arts.  861  and  862. 

"In  case  of  re-assurance,  time  for  giving  notice  of  abandon- 
ment begins  to  run  from  the  end  of  the  day  on  which  the 
assured  has  given  notice  to  the  person  who  has  been  re- 
insured." 

Article  675.  An  abandonment  must  be  uncon- 
ditional. 

When  an  abandonment  is  made,  the  subject- 
matter  of  insurance  must  be  totally  abandoned. 
But  if  the  cause  of  abandonment  arises  from  part 
of  the  subject-matter,  such  part  alone  may  be  aban- 
doned.1 

In  case  part  of  the  insurable  interest  is  insured, 
an  abandonment  may  be  made  according  to  such 
proportion  as  the  sum  insured  bears  to  the  value  of 
the  subject-matter.2 

1  For  instance:  if  part  of  the  goods  have  been  captured,  the 
insured  may  abandon  them  without  affecting  the  other  part. 

2  For  instance:  The  ship  costs  $1,000,000.  The  sum 
insured  is  only  $600,000.  When  the  ship  is  lost,  the  insured 
may  abandon  six  tenths  of  the  ship  without  affecting  the 
four  tenths. 


MARINE  COMMERCE.  287 

Art.  866  of  the  German  Commercial  Code  reads  as  follows: — 
"Notice  of  abandonment  must,  to  be  of  any  effect,  be  made 
without  restriction  or  condition,  and  refer  to  the  thing  insured 
in  its  entirety,  and  to  such  extent  as  at  the  time  of  the  acci- 
dent it  was  exposed  to  sea  risks. 

"If,  however,  the  insurance  was  not  effected  for  its  full 
value,  the  assured  is  only  bound  to  abandon  a  proportionate 
part  of  the  thing  insured." 

Article  676.  When  the  insurer  has  accepted  the 
abandonment,  he  cannot  raise  an  objection  after- 
wards. 

Article  677.  By  the  abandonment  the  insurer 
acquires  all  the  rights  of  the  insured  over  the  subject- 
matter  of  insurance.1 

When  the  insured  abandons  the  subject-matter, 
he  must  deliver  to  the  insurer  all  documents  relative 
thereto.2 

1  Identical  with  Art.  868,  par.  1,  of  the  German  Commercial 
Code. 

2  Art.  869,  par.  1,  of  the  German  Commercial  Code  reads 
as  follows: — 

"Payment  of  the  sum  insured  cannot  be  demanded  till 
after  the  documents  justifying  the  abandonment  have  been 
sent  to  the  insurer,  and  a  reasonable  time  has  passed  for  their 
inspection.  If  abandonment  has  taken  place  on  account  of 
the  disappearance  of  the  ship,  there  ought  to  be  joined  to 
such  documents  credible  proofs  of  the  ship's  having  left  the 
port  of  departure  and  the  non-arrival  of  the  ship  at  the  port 
of  destination  during  the  time  allowed  for  any  delay." 

Article  678.  On  the  abandonment  the  insured 
shall  notify  the  insurer  whether  there  exists  any 
other  contract  of  insurance  on  the  same  subject- 


288  COMMERCIAL  CODE  OF  JAPAN. 

matter  and  whether  the  subject-matter  has  been 
encumbered  with  any  debt,  and  if  so,  what  kind  of 
contract  or  debt. 

Until  the  insurer  is  so  notified,  he  is  not  obliged 
to  pay  the  sum  insured. 

If  a  period  of  time  has  been  fixed  for  the  payment 
of  the  sum  insured,  such  period  begins  to  run  from 
the  time  when  the  insurer  receives  the  notification 
mentioned  in  the  first  paragraph. 

This  article  corresponds  to  Art.  869,  pars.  2  and  3,  of  the 
German  Commercial  Code. 

Article  679.  When  the  insurer  does  not  accept 
the  abandonment,  the  insured  cannot  require  him 
to  pay  the  sum  insured  unless  the  cause  of  the 
abandonment  can  be  proved. 


SECTION  6.— THE  SHIP'S  CREDITORS. 

Article  680.  A  creditor  entitled  to  the  payment 
of  any  one  of  the  following  debts  has  a  maritime  lien 
on  the  ship,  its  appurtenances,  and  the  freight  which 
has  not  been  received  by  the  shipowner: — 

1.  Expenses  for  the  public  sale  of  the  ship  and 
its  appurtenances,  and  those  for  their  safekeeping 
in  process  of  such  sale. 

2.  Expenses  for  the  safekeeping  of  the  ship  and 
its  appurtenances  at  the  last  port. 

3.  Taxes  imposed  on  the  ship  in  regard  to  the 
voyage. 

4.  Pilotage  and  towage. 


MARINE  COMMERCE.  289 

5.  Expenses  for  assistance  and  sauvetage  and 
the  ship's  liability  to  contribution  for  general  aver- 
age. 

6.  Debts  incurred  in  case  of  necessity  for  the 
continuance  of  the  voyage. 

7.  Claims  of  the  captain  and  any  other  member 
of  the  crew  arising  from  the  contract  of  hire. 

8.  In  case  a  ship  has  not  entered  upon  any 
voyage  after  its  sale  or  building,  claims  arising  from 
such  sale  or  building  and  its  equipment,  and  claims 
arising  from  the  supplies  of  equipage,  food  and  fuel 
for  the  last  voyage. 

9.  Claims  arising  from  damages  done  to  others 
by  the  captain  or  any  other  member  of  the  crew  in 
the  execution  of  his  duties. 

Arts.  754  and  755  of  the  German  Commercial  Code  read 
as  follows: — 

"Art.  754.  The  following  are  debts  which  may  be  enforced 
by  the  creditor  of  a  ship : — 

"1.  When  the  ship  is  sold  by  virtue  of  an  execution,  put 
in  it  such  watching  and  guarding  of  the  ship  and  its  rigging 
and  appurtenances  since  its  being  brought  into  the  last 
port,  and  which  are  not  included  in  the  costs  of  such  forced 
sale. 

"2.  Public  taxes  due  from  the  ship;  navigation  and  port 
dues,  especially  sums  payable  for  tonnage,  lighthouse,  quaran- 
tine, and  harbour  dues. 

"3.  Claims  of  members  of  the  crew  arising  out  of  contracts 
of  service  and  hiring. 

"4.  Sums  due  for  pilotage  as  well  as  expenses  of  salvage, 
help,  re-purchase  and  re-claim  charges. 

"5.     The  contributions  of  the  ship  for  general  average. 

"6  The  money  due  to  the  creditors  on  a  bottomry  bond, 
as  well  as  the  claims  arising  out  of  other  business  transactions, 


290  COMMERCIAL  CODE  OF  JAPAN. 

which  the  captain  has  concluded  in  his  quality  as  such  in  any 
case  of  necessity  while  the  ship  was  outside  its  own  port,  even 
if  he  is  co-proprietor  or  sole  proprietor  of  the  ship ;  on  the 
same  footing  as  claims  arising  out  of  such  business  transactions 
are  claims  for  provisioning  and  money  lent  to  the  captain 
in  his  quality  as  such,  without  having  agreed  to  give  any 
credit,  while  the  ship  was  outside  its  own  port,  which  have 
occurred  in  cases  of  necessity  for  the  preservation  of  the  ship 
or  continuation  of  the  voyage. 

"7.  Claims  for  non-delivery  or  deterioration  of  goods 
and  luggage  referred  to  in  Art.  673,  par.  2. 

"8.  Claims  not  coming  under  the  head  of  any  of  those 
above  enumerated,  resulting  from  legal  acts  that  the  captain 
has  entered  into  in  his  quality  as  such,  by  virtue  of  the  powers 
conferred  on  him  by  law,  and  not  by  some  special  mandate, 
as  well  as  any  claim  not  coming  under  the  head  of  any  of 
those  above  enumerated,  and  resulting  from  the  non-execution 
or  incomplete  or  defective  execution  of  a  contract  entered 
into  by  the  owner,  in  so  far  as  the  execution  of  such  contract 
is  part  of  the  captain's  duty. 

"9.  Claims  arising  through  some  fault  of  a  member  of  the 
crew,  even  if  such  member  is  at  the  time  co-proprietor  or  sole 
proprietor  of  the  ship. 

"10.  Claims  against  the  owner  which  any  association  has 
in  accordance  with  the  enactments  concerning  insurance 
against  accidents,  and  any  insurance  office  in  accordance 
with  the  enactments  concerning  insurance  against  sickness." 

"Art.  755.  Ship's  creditors  to  whom  the  ship  is  not  al- 
ready pledged  by  bottomry  bond  have  a  legal  right  of  lien 
upon  the  ship  and  its  appurtenances. 

"This  right  of  lien  is  maintainable  against  any  third  person 
in  possession  of  the  ship." 

Article  681.  The  maritime  lien  of  the  creditor 
of  the  ship  on  the  freight  can  be  enforced  only  against 
such  freight  as  is  to  be  paid  for  the  voyage  from 
which  such  lien  arises. 

Corresponds  to  Art.  756  of  the  German  Commercial  Code. 


MARINE  COMMERCE.  291 

Article  682.  If  the  maritime  lien  of  one  creditor 
of  the  ship  conflicts  with  that  of  another  creditor  of 
the  same  ship,  the  superiority  of  the  lien  is  decided 
according  to  the  order  mentioned  in  Art.  680. * 

But,  as  between  the  claims  mentioned  in  Nos.  4-6, 
the  subsequent  lien  is  superior  to  the  antecedent 
lien.2 

If  several  creditors  of  the  ship  are  entitled  to  a 
maritime  lien  of  the  same  rank,  each  creditor  shall 
be  paid  in  proportion  to  the  amount  of  his  claim, 
but  as  between  the  claims  mentioned  in  Art.  680, 
Nos.  4-6,  not  arising  at  the  same  time,  the  subse- 
quent lien  is  superior  to  the  antecedent  lien.3 

A  maritime  lien  arising  from  a  subsequent  voyage 
is  always  superior  to  a  maritime  lien  arising  from  an 
antecedent  voyage.4 

1  Art.  768  of  the  German  Commercial  Code  reads  as 
follows : — 

"Debts  arising  during  the  same  voyage,  as  well  as  those 
which  are  considered  as  arising  during  the  same  voyage,  will 
be  paid  in  the  following  order : — 

"1.  Public  taxes  payable  by  the  ship;  navigation  and 
harbour   dues. 

"2.     Claims  of  the  crew  upon  hiring  and  service  contracts. 

"3  Sums  due  for  pilotage,  as  well  as  connected  with 
salvage,  services  rendered,  re-purchase  and  reclaim  charges, 
contributions  of  the  ship  to  general  average,  debts  arising 
out  of  bottomry  bonds,  and  other  credit  transactions  concluded 
by  the  captain  in  case  of  urgency,  as  well  as  such  debts  as 
are  on  the  same  footing  as  these  latter  ones. 

"4.  Claims  arising  out  of  non-delivery  or  deterioration  of 
cargo  and  luggage. 


292  COMMERCIAL  CODE  OF  JAPAN. 

"5.  Debts  mentioned  in  Art.  754,  sub-sees.  (8)  and  (9)." 
(See  notes  to  Art.  680,  supra.) 

2  According  to  the  order  mentioned  in  Art.  680,  the  debts 
designated  in  the  antecedent  numbers  are  generally  incurred 
after  the  debts  designated  in  the  subsequent  numbers.  Thus, 
the  expenses  for  the  public  sale  of  the  ship  designated  in  No.  1 
are  incurred  after  the  expenses  for  the  safekeeping  of  the 
ship  designated  in  No.  2;  and,  again,  such  expenses  for  the 
safekeeping  are  incurred  after  the  taxes  designated  in  No.  3, 
and  so  forth.  In  a  word,  the  debts  in  No.  1  are  the  latest 
debts  incurred  by  the  ship,  and  the  debts  in  No.  9  are  the 
earliest  debts.  As  a  rule,  the  law  favours  the  later  debts. 
This  is  the  principle  of  Art.  680  and  of  the  first  sentence  of 
the  present  article.  But,  as  between  the  debts  in  Nos.  4-6, 
the  pilotage  is  not  necessarily  incurred  after  the  expenses  for 
salvage,  and  the  expenses  for  salvage  are  not  necessarily 
incurred  after  the  debts  for  the  continuance  of  the  voyage. 
For  this  reason,  the  law  does  not  presume  that  the  debts  in 
No.  4  are  incurred  after  those  in  No.  5,  or  that  the  debts  in 
No.  5  are  incurred  after  those  in  No.  6,  as  it  does  in  regard  to 
the  other  numbers,  but  leaves  the  priority  in  law  to  be 
determined  by  the  facts  of  the  case.  In  consequence  of  this, 
if  the  expenses  for  salvage  in  No.  5  are  incurred  after  the 
pilotage  in  No.  4,  the  pilot  shall  not  be  paid  until  the  persons 
who  saved  the  ship  have  been  satisfied,  irrespective  of  the 
order  mentioned  in  Art.  680. 

3  Art.  769  of  the  German  Commercial  Code  reads  as 
follows : — 

"Debts  referred  to  in  Art.  768,  sub-sects.  (1),  (2),  (4),  (5), 
are  of  equal  rank  when  they  are  under  the  same  number. 

"Referring  to  debts  enumerated  in  Art.  768  (3),  one  that 
is  incurred  later  takes  precedence  over  one  incurred  before; 
those  incurred  simultaneously  rank  equally. 

"When  the  captain  has  concluded  several  transactions 
arising  out  of  the  same  case  of  urgency,  debts  arising  therefrom 
rank  equally. 


MARINE  COMMERCE.  293 

"Claims  arising  out  of  transactions,  especially  out  of  giving 
bottomry  bonds,  which  the  captain  has  concluded,  to  pay 
anterior  debts,  come  under  those  enumerated  in  Art.  768  (3), 
as  well  as  debts  arising  out  of  contracts  which  he  has  con- 
cluded to  obtain  a  prolongation  of  time  of  payment,  or  to 
recognize  or  renew  such  anterior  debts,  have  only  the  right 
of  preference  which  the  anterior  debt  enjoyed,  even  if  such 
transaction  or  contract  was  necessary  for  the  continuation  of 
the  voyage." 

4  Art.  767  of  the  German  Commercial  Code  reads  as 
follows : — 

"In  the  number  of  claims  enumerated  in  Art.  754,  Nos.  3-9 
[see  notes  to  Art.  680],  those  referring  to  the  last  voyage, 
among  which  must  be  included  those  arising  since  the  termi- 
nation of  the  last  voyage,  have  a  right  of  precedence  over  the 
claims  arising  out  of  former  voyages. 

"Among  claims  which  do  not  arise  out  of  the  last  voyage, 
those  having  reference  to  a  later  are  preferred  to  those  referring 
to  a  former  one. 

"Nevertheless,  the  ship's  creditors  referred  to  in  Art.  754,' 
sub-sect.  3  [see  notes  to  Art.  680]  have,  for  claims  arising  out 
of  a  former  voyage,  the  same  right  of  precedence  as  that  which 
belonged  to  them  for  claims  arising  out  of  a  later  one,  in  so 
far  as  these  different  voyages  are  a  part  of  the  same  contract 
of  service   and   hiring. 

"If  the  voyage  for  which  the  bottomry  bond  is  given  com- 
prises several  voyages  within  the  meaning  of  Art.  757  (i.e. 
the  ship  has  been  equipped  anew  or  has  been  undertaken 
by  virtue  of  a  new  charter  party  or  after  a  complete  dis- 
charge of  cargo),  the  lender  on  such  bond  takes  rank  after 
the  ship's  creditors  whose  claims  arise  out  of  voyages  com- 
menced later,  and  after  the  end  of  the  first  of  these  voyages." 

Article  683.  If  the  maritime  lien  of  the  creditor 
of  the  ship  conflicts  with  any  other  mechanic's  lien, 
the  former  is  superior  to  the  latter. 

Corresponds  to  Art.  776  of  the  German  Commercial  Code. 


294  COMMERCIAL  CODE  OF  JAPAN. 

Article  684.  When  the  shipowner  has  transferred 
the  ship,  the  transferee,  after  the  registration  of 
such  transfer,  must  give  a  public  notice  to  maritime 
lienors  requiring  them  to  set  up  their  claims  within 
a  certain  period.  But  such  period  shall  not  be  less 
than  one  month. 

If  maritime  lienors  do  not  set  up  their  claims  within 
such  period,  their  maritime  lien  is  extinguished. 

Arts.  764  and  765  of  the  German  Commercial  Code  read  as 
follows : — 

"Art.  764.  The  creditor's  right  of  lien  upon  a  ship  is  lost, 
except  in  the  case  of  a  forced  appropriation  of  the  ship,  in  its 
own  country,  by  a  sale  of  the  ship  effected  by  the  captain 
in  case  of  urgent  necessity  and  by  virtue  of  his  legal  qualifica- 
tions; the  price  of  the  sale  is  substituted  for  the  ship  from 
the  point  of  view  of  the  ship's  creditor,  so  long  as  the  pur- 
chaser owes  such  price  or  so  long  as  such  price  is  still  in  the 
captain's   possession. 

"These  enactments  are  applicable  to  other  rights  of  lien 
over  the  ship." 

"Art.  765.  If  a  ship  is  transferred  otherwise  than  in  the 
cases  provided  for  by  Art.  764,  the  transferee  of  it  is  entitled 
to  demand  the  exclusion  of  unknown  creditors  and  their 
rights  of  lien  by  means  of  a  public  summons." 

Article  685.  The  maritime  lien  of  a  creditor  of 
a  ship  is  extinguished  after  one  year  has  elapsed 
from  the  time  when  the  creditor  acquired  such  lien. 

The  maritime  lien  mentioned  in  Art.  680,  No.  8, 
is  extinguished  as  soon  as  the  ship  has  entered  upon 
a  voyage. 

This  period  of  time  is  not  prescription  and  therefore  the 
rules  for  prescription  are  not  applicable  to  such  case. 

Art.   901  of  the  German  Commercial  Code  provides  that 


MARINE  COMMERCE.  295 

claims  mentioned  in  Art.  754,  Nos.  1-9  (see  notes  to  Art. 
680)  cannot  be  brought  after  one  year,  but  it  provides  that 
time  for  prescription  runs  for  two  years : — 

"1.  For  claims  of  the  crew  arising  out  of  contracts  for 
services  or  hire,  if  they  were  discharged  beyond  the  Cape 
of  Good  Hope  or  Cape  Horn. 

"2.  For  claims  for  compensation  to  be  made  on  account 
of  collision." 

Article  686.  A  registered  ship  may  become  the 
subject-matter  of  a  mortgage. 

A  mortgage  of  the  ship  includes  all  its  appurte- 
nances. 

All  provisions  in  regard  to  the  mortgage  of  real 
property  are  applicable  to  a  mortgage  of  the  ship. 

According  to  the  Japanese  Civil  Code,  a  mortgage  is  a 
jus  in  re  over  the  real  property  which  is  furnished  as  security 
for  debts.     The  mortgagor  must  retain  possession. 

Article  687.  A  maritime  lien  on  the  ship  is 
superior  to  the  right  of  the  mortgagee. 

Article  688.  A  registered  ship  cannot  become  the 
subject-matter  of  a  pledge. 

According  to  the  Japanese  Civil  Code,  a  pledge  is  a  jus 
in  re  over  the  real  or  personal  property  which  is  furnished  as 
security  for  debts.  Possession  of  the  property  must  be  taken 
by  the  creditor. 

Article  689.  The  provisions  of  Arts.  680-688  are 
applicable  to  ships  in  process  of  building. 


Finis. 


INDEX. 


[The  references  are  to  the  Articles  of  the  Code  and  the  notes  thereto.] 


ABANDONMENT, 

Marine  insurance,  671-679. 

Society   anonyme,    formation, 
138. 
ABSOLUTE  COMMERCIAL 

TRANSACTIONS,  4  n.l,  263. 
ABSORPTION, 

Societe  anonyme,  222-223. 

Societe"  en  nom  collectif, 77-82. 
ACCEPTANCE, 

Bills  of  exchange,  465-473. 

Bills  of  exchange,  for  honor 
500-507. 

Offer  and,  269-272. 
ACCOUNT   STATED,   291-296. 
ACCOUNTS, 

Brokers,  309. 

Business  associations,  26-27. 

Current  accounts,  291-296. 

Ship's  captain,  573. 

Ship's  husband,  554. 

Societe  anonyme,  190-198. 

Societe'    en    commandite    par 
actions,  251. 

Societe  en  nom  collectif,  101. 

Trade  books,  25-28. 
ADMINISTRATIVE  DIVI- 
SIONS, 22  n.2. 
ADVERTISING, 

Commission  merchants,  320  n. 
AGENCY,     see     Brokers;      Com- 
mission Merchants. 

Authority  of  agent,  267. 

Captain    of    ship,    authority, 
566-572. 

Clerks,  33. 

Commercial  agents,  36-41. 

Death  of  principal,  268. 

Forwarding  agents,  321-330. 

Lien  of  commercial  agent,  41. 

Managers,  29-32. 

Negotiable  paper,  436. 

Notice  to  commercial  agents, 
39. 

Restriction  on  authority,  cap- 
tain of  ship,  567. 

Scope  of  agency,  267. 


AGENCY—  continued. 

Society  en  commandite,   114- 

115. 
Societe1  en  nom  collectif,  mem- 
bers, 61-62. 
Termination,  40,  268. 
Undisclosed  principal,  266. 
Undisclosed  principal,  brokers, 

311. 
Undisclosed    principal,    insur- 
ance, 402. 
Undisclosed    principal,    nego- 
tiable paper,  436. 
ALLONGE,  497. 
ALTERATION, 

Articles  of  association,  58,  138, 

208-220. 
Negotiable  instruments,  437. 
APPLICATION  OF  LAW,  1-3. 
APPRENTICES,  34. 
ARGENTINE     CODE,     166    n., 

177  n.,  255  n.l. 
ARTICLES  OF  ASSOCIATION, 
Societe  anonyme,  120-122. 
Societ6   anonyme,   alteration, 

208-220. 
Soci6t6  en  commandite,  106. 
Societe    en    commandite    par 

actions,  237. 
Societe  en  nom  collectif, 49-50. 
ARTISANS, 

Pro visionsof  German  Code,  8  n. 
ASSIGNMENTS, 

Insurance ,  subject-matter,  404. 
Societe  en  commandite,  mem- 
bers' interests,   112. 
Societe  en  nom   collectif,  as- 
signment of  debts  to,  55. 
Societe  en  nom  collectif,  mem- 
bers'  interests,   59. 
Warehousing,      recepisse      or 

warrant,  364-365,  367. 
Way-bills,  335. 
ASSISTANCE, 

Ships,  568,  599,  606. 
ASSOCIATIONS,     see     Business 
Associations. 


298 


INDEX. 


ATTACHMENTS, 

Ships,  543. 
ATTORNEY-GENERAL, 

Dissolution   of  business   asso- 
ciations, 47-48. 

Liquidators     for     societ6     en 
nom   collectif,   89. 
AUCTION  SALES, 

Baggage,  351. 

Carners,  345-347. 

Commission  merchants,  318. 

Ship-owners,    sales    of    cargo, 
610. 

Warehousemen,  sales  by,  381. 

Warehousing,   holder  of  war- 
rant, 369-373. 
AUDITORS, 

Soci6te"  anonyme,   180-189. 

Soci£te    en    commandite    par 
actions,  239,  241,  245. 
AUSTRIAN  COMMERCIAL 

CODE,  151  n.,  210  n.,  358  n. 

BAGGAGE, 

In  general,  351-352. 

Ships,  632,  638-639. 
BAILMENTS,  see  Carriers;    For- 
warding   Agents;     Pledges; 
Warehousing. 

Accessory  bailments,  353-356. 

Care  required   of  bailee,   353- 
354. 

Deposits  for  safe-keeping,  353. 

Hotels,  goods  of  guests,  354- 
356. 

Insurance  by  bailee,  421. 

Liability  of  bailee,  353-356. 

Limitation  of  actions,  356. 

Money,  securities,  etc..  liability 
as  to,  355. 

Prescription,  356. 

Restaurants,  goods  of  guests, 
354-356. 

Value  of  goods  to  be  declared, 
355. 
BALANCE  SHEETS, 

Business   associations,    26-27. 
BANKRUPTCY, 

Bills  of  exchange,  480. 

Insurance,  405-406. 

Societe"  anonyme,  174,  188. 

Soci£t6  en  nom  collectif,  mem- 
ber, 69. 

Sociae  tacite,  302. 
BANKS, 

Checks,  530-537. 
BAUZINSEN,   196  n.  • 


BELGIAN     COMMERCIAL 

CODE,  44  n., 63  n.,  100  n.2,  151 

n.l,    164   n.l,    165    n.,  199  n., 

208  n.,  358  n. 
BELGIAN   LAW   OF    1873,   255 

n.l. 
BILLS  AND  NOTES,  see  Nego- 
tiable Paper. 
BILLS    OF    EXCHANGE,    445- 

524,       and      see      Negotiable 

Paper. 
BILLS  OF  LADING, 

Marine,  620-629. 

Way-bills,  333-335,  344. 
BONDS, 

Societe"  anonyme,  199-207. 
BOOKS,  see  Accounts. 
BRANCH   ESTABLISHMENTS, 

Registration,  10,  13. 

Societe  en  nom  collectif,     51- 
53. 
BROKERS,  see  Commission  Mer- 
chants. 

Account  books,  309. 

Authority,  306. 

Compensation,  312. 

Consignments  to,  306. 

Definition,  305. 

Distinction    from    commission 
merchants,  313  n. 3. 

Memoranda   to   be   made   by, 
308. 

Names  of  parties  not  disclosed, 
310-311. 

Payments  to,  306. 

Samples  received  by,  307. 

Undisclosed  principal,  311. 
BUSINESS, 

Carrying  on  commercial  trans- 
action as,  4  n.3. 

Transfer  of,  22-23. 
BUSINESS    ASSOCIATIONS, 

Beginning  business,  46-47. 

Books  of  account,  26-27. 

Definition,  42. 

Dissolution  for  acts  contrary 
to  public  order,  48. 

Dissolution  for  failure  to  begin 
business,  47. 

Foreign,  255-260. 

Infants   and    married   women 
as  members,  6. 

Inventory  and  balance  sheet, 
26-27. 

Japanese  names,   17  n. 
uristic   persons,   44. 
Linds,  43. 


INDEX. 


299 


BUSINESS    ASSOCIATIONS  — 

continued. 
Name  not  to  be  used  when  no 

association  exists,  18. 
Penal  provisions,  261-262. 
Registration  of  formation,  45- 

46. 
Residence,  44. 
Societe     anonyme,      119-234. 

(See  that  title  for  details.) 
Societe  en  commandite,   104- 

118.       (See    that    title    for 

details.) 
Societe    en    commandite    par 

actions,  235-254.     (See  that 

title  for  details.) 
Societe  en  nom  collectif,  49- 

103.       (See    that    title    for 

details.) 
Societe  tacite,  297-304.     (See 

that  title  for  details.) 
Trade  names,  17-18. 

CAPITAL, 

Decrease,     societe     anonyme, 
220. 

Increase,     societe     anonyme, 
210-219. 

Loss  of,  societe  anonyme,  174. 
CARRIAGE, 

Of     goods     or     passengers     a 
relative    commercial    trans- 
action, 4  n.l. 
CARRIAGE  INSURANCE,  423- 

426. 
CARRIERS,       see       Forwarding 
Agents;    Marine  Commerce. 

Acceptance  by  consignee,  343, 
348. 

Assignment  of  way-bill,   335. 

Auction  sales,  baggage,  351. 

Auction  sales,  goods,  345-347. 

Baggage,  351-352. 

Bills  of  lading,  333-335,  344, 
620-629. 

Care  as  to  goods,  337. 

Care  as  to  passengers,  350. 

Connecting  carriers,  339,  349. 

Consignee,    refusal  to   accept, 
346-347. 

Consignee,     rights     and     lia- 
bilities, 343. 

Damages,  injury  to  passengers, 
350. 

Damages,    loss    or    injury    of 
goods,  340-341. 

Definition,  331. 


CARRIERS— continued. 

Delay  of  goods,  337. 

Delay  of  goods,  damages,  340. 

Deposit,  baggage,  351. 

Deposit,  goods,  345-347. 

Destruction  of  goods,  freight, 
336. 

Forwarding  agents  as,  327. 

Forwarding  agents,  liability  for 
acts  of,  337. 

Freight,  consignee's  liability, 
343. 

Freight,  deduction  from  dam- 
ages on  loss  of  goods,  340. 

Freight,  destruction  of  goods, 
336. 

Freight,  proportional,  when 
carriage  is  stopped,  342. 

Goods,  332-349. 

Gross  negligence  as  to  goods, 
341. 

Injury  to  goods,  337. 

Injury  to  goods,  damages, 
340-341. 

Insurance  of  goods  in  transit, 
423-426. 

Invoice,  332. 

Joint  liability,  339. 

Liability  as  to  money,  securi- 
ties, etc.,  338. 

Liability  extinguished  on  ac- 
ceptance by  consignee,  348. 

Liability  for  loss,  injury  or 
delay  of  goods,  337. 

Lien,  349. 

Limitation  of  actions,  349. 

Loss  of  goods,  337. 

Loss  of  goods,  measure  of 
damages,   340-341. 

Malicious  destruction  or  in- 
jury of  goods,  341. 

Marine,  carriers  of  goods, 
331  n.,  590-629. 

Marine,  carriers  of  passengers 
630-640. 

Measure  of  damages,  injury 
to  passengers,  350. 

Measure  of  damages,  loss  or 
injury  of  goods,  340-341. 

Money,  securities,  etc.,  lia- 
bility as  to,  338. 

Negligence  as  to   goods,   337. 

Negligence  as  to  goods,  dam- 
ages,  340-341. 

Passengers,  350-352. 

Passengers,  ships,  630-640. 

Prescription,  349. 


300 


INDEX. 


C  ARR I ER  S — continued. 

Railways,  331  n. 

Retention  of  goods,  349. 

Return  of  goods  to  consignor, 
342. 

Sales  of  baggage,  351. 

Sales  of  goods,  345-347. 

Sea,     carriage     by,     331     n., 
590-640. 

Ships,  carriage  of  goods,  590- 
629. 

Ships,  carriage  of  passengers, 
6307640. 

Stopping  of  carriage  by  con- 
signor, 342. 

Subrogation      of      forwarding 
agent,  326. 

Successive  carriers,    339,    349. 

Value    of    articles    to    be    de- 
clared, 338. 

Way-bills,  333-335. 

Way-bills,  surrender  of,  344. 
CAUSA  MERCANTILIS, 

Law  applicable,  1-3. 

Trader  as  centre  of,  4  n.4. 
CHARTER-PARTIES,   590-619, 

640. 
CHECKS,  530-537,  and  see  Ne- 
gotiable Paper. 
CLERKS,  30,  33. 
CODES, 

History  of,  page  ix. 
COLLATERAL  SECURITY, 

Bills    of    exchange,    474-481, 
500,   506-507. 

Commercial  transactions,  277. 
COLLISIONS, 

Ships,  650-652. 
COMMERCIAL  AGENTS.  36-41. 
COMMERCIAL  CODES, 

History  of,  page  ix. 
COMMERCIAL  PAPER,  see  Ne- 
gotiable Paper. 
COMMERCIAL  TRANSAC- 
TIONS, 

Absolute,  4  n.l.,  263. 

Accessory,  265. 

Application  of  law,  1-3. 

Definitions,  263-265. 

Law  applicable,  1-3. 

Relative,  4  n.l,  264. 

Securities,  263  n.3. 

Traders,  transactions  of,   265. 

What  are,  263-265. 


COMMISSION  MERCHANTS, 

Advertising  business,  320  n. 

Auction  sale  where  principal 
does  not  accept  goods,  318. 

Buying  from  or  selling  to 
principal,  317. 

Compensation,   317. 

Definition,  313. 

Deposit  where  principal  does 
not  accept  goods,  318. 

Distinction  from  brokers,  313 
n.3. 

Guaranty  of  debts,  315. 

Liability  for  sale  below  or 
purchase  above  price  fixed, 
316. 

Liability  to  principal  for  debt, 
315. 

Lien,  319. 

Notice  to  principal  of  acting 
in  adverse  capacity,  319. 

Rights  and  duties  as  to  prin- 
cipal, 314. 

Transactions   ether  than  sell- 
ing or  buying,  320. 
COMMON  CARRIERS,  see  Car- 
riers. 
COMPANIES,  see  Business  Asso- 
ciations. 
CONCILIUM   DCMESTICUM,  7 

n.2. 
CONSOLIDATION, 

Societe    anonyme,    222-223. 

Societe  en  nom  collectif,  77-82. 
CONTRACTS,   see  Sales. 

Acceptance  of  offer,  269-272. 

Joint  and  several,  273. 

Notice  of  acceptance,  270-271. 

Offer  and  acceptance,  269-272. 

Performance,  time  of,  business 
hours,  283. 

Place  of  performance,  278. 

Time  of  performance,  287. 
CONTRIBUTIONS, 

Societe  en   commandite,    108. 

Societe  en  nom  collectif,   56, 
66,  71. 
CORPORATIONS,   see   Business 

Associations;       Societe     Ano- 
nyme. 
COURTS, 

Administrative  power,  47. 

Registration  in,  9  n.2. 
CURRENT    ACCOUNTS,     291- 

296. 


INDEX. 


301 


CUSTOMARY  LAW,  1. 

DAMAGES, 

Carriers,    loss    or    injury    of 
goods,     340-341,     544-545, 
558-559. 
Carriers,  passengers,  350. 
Unfair  competition,  20. 
DEATH, 

Principal,    agency   not   termi- 
nated,   268. 
Societ6  en  commandite,  death 

of  member,  117. 
Societe  en  nom  collectif,  death 

of  member,  69,  102. 
Soci6te  tacite,   death  of  pro- 
prietor,  302. 
DEMURRAGE, 

Ships,  594,  605. 
DEPOSIT,  see  Bailments;    Ware- 
housing. 
Baggage,  351. 
Bills  of  exchange,  no  demand, 

485. 
Bills  of  exchange,  non-accept- 
ance, 474-481. 
Carriers,  345-347. 
Carriers,  ships,  607. 
Commission  merchants,  318. 
Vendees,  289-290. 
Warehousing,  380. 
DETTE    PORTABLE,    278    n., 

279  n. 
DETTE    QUERABLE,    278    n., 

279  n. 
DIRECTORS, 

Societe     anonyme,      164-179, 
221-225. 
DISSOLUTION, 

Societe  anonyme,  221-225. 
Societe  en   commandite,    118. 
Societe"    en    commandite    par 

actions,  246-248. 
Societe  en  nom  collectif,  74- 
83,   100,   103. 
DORMANT  PARTNERS, 
Societe  tacite,  297-304. 
DRAFTS,  see  Negotiable  Paper, 
Bills  of  Exchange. 

EMPLOYEES, 
Agency,  34-35. 
Trade,  29-35. 

ENGLISH  BILLS  OF  EX- 
CHANGE ACT,  500  n., 
535  n. 


ENGLISH  LAW, 

Liability  of  ship-owners,   544 
n.l. 
ENTITY  THEORY,  see  Juristic 
Person. 
Business  association  as  a  juris- 
tic person,  44. 
ESTOPPEL, 

Partnership  by,  65  n. 
Societ6  en  commandite,   116. 
EXCHANGE, 
Rate  of,  491. 

FAMILY, 

Japanese  law  as  to,  428  notes. 
FAMILY  COUNCIL,  7  n.2. 
FIRE  INSURANCE,  419-422. 
FIRST   JAPANESE    COMMER- 
CIAL CODE,   65  n. 
FOREIGN     BUSINESS    ASSO- 
CIATIONS, 255-260. 
FORGERY, 

Negotiable   instruments,    437. 
FORWARDING  AGENTS, 

Acceptance  of  delivery,  effect 
of,  330. 

Care  required,  322. 

Carriers,  acting  as,  327. 

Carriers,  choice  of,  322. 

Carriers,  liability  for  acts  of 
agent,  337. 

Carriers,  subrogation  to  rights 
of,  326. 

Commission    merchants,    pro- 
visions as  to,  applicable,  32 1 . 

Compensation,  323. 

Definition,  321. 

Delay  of  goods,  322. 

Delivery  of  goods,  322. 

Freight,  323. 

Freight,  liability  of  consignee, 
330. 

Injury  to  goods,  322. 

Liability    for    loss,    injury    or 
delay,  322 

Lien,  324. 

Limitation  of  actions,  328-329. 

Loss  of  goods,  322. 

Negligence,  322. 

Prescription,  328-329. 

Retention  of  goods,  324. 

Safe-keeping  of  goods,  322. 

Subrogation  to  rights  of  car- 
rier, 326. 

Successive  forwarding,  325. 

Value    of    articles    to    be    de- 
clared,   330. 


302 


INDEX. 


FREIGHT, 

Consignee's  liability,  343. 

Destruction  of  goods,  336. 

Forwarding  agents,  323,  330. 

Ships,  amount,   608-609. 

Ships,  proportionate,  613-614. 

Ships,     termination     of     con- 
tract, 598,  600-603. 

Ships,  whole,  615-617. 
FRENCH  CIVIL  CODE, 

Art.  1247,  278  n. 
FRENCH  COMMERCIAL  CODE, 

General    references,     145    n., 
176  n.,  232  n.l. 

Art.  1,  4n.4. 

Art.  632,  263  n.5,  264  n.2,  3, 
4,  7,  8,  11,  12. 

Application  of,  3  n. 

Interest,  276  n. 

Juristic  persons,  44  n. 

Shares  acquired  by  association, 
151  n. 

Warehousing,  358  n. 
FRENCH  LAW, 

Directors,  164  n.l,  2,  177  n. 

Liability  of  ship-owners,  544 
n.l. 
FRENCH  LAW  OF  1867, 

Shares,  transfers,  153  n.l. 

GENERAL  AVERAGE,  599,  606, 

641-652,  655. 
GERMAN  CIVIL  CODE, 

Art.  269,  278  n. 

Application     to      commercial 
transactions,  1  n. 

Interest,  rate  of,  276  n. 
GERMAN  COMMERCIAL 
CODE, 

Art.  1,  4  n.4,  263  n.2,  264  n.l. 

Art.  4,  8  n. 

Art.  8,  9  n.2. 

Art.  10-11,  11  n. 

Art.  12,  9  n.2. 

Art.  13,  10  n. 

Art.  15,  12  n.,  13  n. 

Art.  18,  16  n.2,  18  n. 

Art.  19-20,  17  n. 

Art.  23,  22  n.l. 

Art.  29-30,  19  n. 

Art.  31,  24  n. 

Art.  36,  2  n. 

Art.  37,  20  n. 

Art.  38,  25  n.l. 

Art.  39,  26  n. 

Art.  42,  2  n. 

Art.  44,  28  n. 


GERMAN  COMMERCIAL 
CODE — continued. 
Art.  49,  30  n.l. 
Art.  50,  30  n.2. 
Art.  53,  31  n. 
Art.  60-61,  32  n.2. 
Art.  84,  37  n. 
Art.  86,  39  n. 
Art.  92,  40  n. 
Art.  93,  305  n. 
Art.  94,  308  n. 
Art.  95,  311  n. 
Art.  96,  307  n. 
Art.  97,  306  n. 
Art.  99,  312  n. 
Art.  100-101,  309  n. 
Art.  106,  51  n. 
Art.  107,  53  n. 
Art.  112-113,  60  n. 
Art.  114,  56  n. 
Art.  116,  57  n. 
Art.  123,  45  n.,  46  n. 
Art.  125,  61  n. 
Art.  126,  52  n.l,  2. 
Art.  130,  64  n. 
Art.  131,  69  n.,  74  n. 
Art.  132,  68  n.2. 
Art.  133,  70  n.,  83  n. 
Art.  134,  68  n.2. 
Art.  138-139,  69  n. 
Art.  140,  69  n.,  70  n.,  83  n. 
Art.  143,  76  n.2. 
Art.  145,  86  n. 

Art.  146,  87  n.,  88  n.,  102  n.2. 
Art.  147,  96  n. 
Art.  148,  90  n.,  97  n. 
Art.  149,  91  n. 
Art.  150,  93  n. 
Art.  151,  91  n. 
Art.  154,  94  n. 
Art.  155,  91  n.,  95  n. 
Art.  157,  99  n.,  101  n. 
Art.  158,  85  n. 
Art.  159,  103  n. 
Art.  161,  104  n.,  105  n. 
Art.  162,  107  n. 
Art.  164,  115  n. 
Art.  165,  113  n. 
Art.  170,  115  n. 
Art.  177,  117  n. 
Art.  179,  155  n. 
Art.  180,  145  n.2. 
Art.  182,  120  n.l. 
Art.  183,  155  n. 
Art.  184,  122  n.,  128  n.l. 
Art.  186,  122  n. 
Art.  188,  123  n.l. 


INDEX.                   303 

;rman  commercial 

GERMAN  COMMERCIAL 

CODE — continued. 

CODE — continued. 

Art.  189,  125  n.,  126  n.2. 

Art.  289,  220  n.2. 

Art.  190,  123  n.3.,  131  n. 

Art.  292,  221  n. 

Art.  192-193,  124  n.,  134  n.2. 

Art.  295,  226  n. 

Art.  195,  141  n. 

Art.  296,  228  n. 

Art.  196,  138  n. 

Art.  297,  234  n. 

Art.  198-199,  141  n. 

Art.  299,  227  n. 

Art.  200,  45  n.,  46  n.,  147  n.2., 

Art.  300,  229  n. 

149  n. 

Art.  311,  232  n.2. 

Art.  202,  136  n.,  137  n. 

Art.  320,  235  n.,  236  n. 

Art.  209,  147  n.2. 

Art.  321,  237  n. 

Art.  211,  144  n.l. 

Art.  322,  237  n. 

Art.  214,  197  n. 

Art.  323,  238  n.2,  240  n., 

Art.  218,  153  n.3. 

242  n. 

Art.  219,  152  n. 

Art.  325,  243  n. 

Art.  220,  144  n.2.,  153  n.l., 

Art.  327,  240  n.,  244  n. 

154  n. 

Art.  328,  239  n.,  245  n. 

Art.  221,  144  n.2. 

Art.  330,  246  n. 

Art.  222,  149  n.,  150  n. 

Art.  331,  248  n.,  249  n. 

Art.  225,  146  n. 

Art.  332,  252  n.,  253  n.l. 

Art.  226-227,  151  n.l,  2. 

Art.  334,  253  n.2. 

Art.  231,  165n.,  167n.,  170n.2. 

Art.  335,  298  n.,  304  n. 

Art.  232,  169  n.,  170  n. 

Art.  337-338,  304  n. 

Art.  234,  180  n. 

Art.  339,  301  n. 

Art.  235,  170  n.2. 

Art.  340,  303  n. 

Art.  236,  175  n. 

Art.  343-344,  265  n.2. 

Art.  239,  171  n. 

Art.  345,  3  n. 

Art.  240,  174  n.l,  2. 

Art.  354,  274  n. 

Art.  241,  177  n. 

Art.  355,  291  n.,  293  n.,  295  n., 

Art.  243,  183  n. 

296  n. 

Art.  246,  181  n.,  182  n.l. 

Art.  358-359,  283  n. 

Art.  247,  185  n. 

Art.  362,  271  n. 

Art.  248,  184  n. 

Art.  365,  281  n.3. 

Art.  249,  186  n. 

Art.  369,  284  n. 

Art.  251,  161  n.l. 

Art.  374,  286  n,2. 

Art.  252,  161  n.2,  3,  162  n. 

Art.  376,  287  n.2. 

Art.  253,  157  n.,  159  n. 

Art.  379,  289  n. 

Art.  254,  160  n. 

Art.  383,  313  n.l. 

Art.  255-256,  156  n. 

Art.  384,  319  n. 

Art.  260,  158  n.l,  190  n. 

Art.  386,  316  n. 

Art.  263,  191  n. 

Art.  387,  313  n.3. 

Art.  265,  192  n. 

Art.  388-389,  318  n. 

Art.  266,  158  n.2,  198  n. 

Art.  392,  314  n. 

Art.  267,  198  n. 

Art.  394,  315  n. 

Art.  268-269,  178  n. 

Art.  397,  319  n. 

Art.  271,  163  n.l. 

Art.  400,  317  n.l. 

Art.  272,  163  n.2. 

Art.  403,  317  n.2. 

Art.  274,  208  n. 

Art.  406,  320  n. 

Art.  275,  209  n. 

Art.  407,  321  n. 

Art.  278,  210  n.,  212  n. 

Art.  408,  322  n. 

Art.  279,  215  n. 

Art.  409,  323  n.l. 

Art.  280,  217  n. 

Art.  410,  324  n. 

Art.  281,  273  n.4. 

Art.  411,  325  n.,  326  n. 

Art.  284,  217  n. 

Art.  412,  327  n. 

Art.  286-287,  217  n. 

Art.  413,  323  n.2. 

Art.  288,  220  n.l. 

Art.  414,  328  n. 

304 


INDEX. 


GERMAN  COMMERCIAL 
CO  DE — continued. 
Art.  416,  357  n. 
Art.  418,  375  n. 
Art.  420,  377  n. 
Art.  421,  370  n. 
Art.  422,  378  n. 
Art.  423,  383  n. 
Art.  424,  365  n. 
Art.  425,  331  n. 
Art.  426,  332  n. 
Art.  428,  342  n. 
Art.  429,  337  n.2,  338  n. 
Art.  430,  340  n.,  341  n. 
Art.  431,  337  n.2. 
Art.  432,  339  n. 
Art.  433,  342  n. 
Art.  435,  343  n.l. 
Art.  436,  343  n.2. 
Art.  437,  345  n. 
Art.  438,  348  n. 
Art.  439-442,  349  n. 
Art.  444-445,  333  n.2. 
Art.  446,  334  n. 
Art.  448,  344  n. 
Art.  450,  335  n. 
Art.  472,  350  n. 
Art.  476,  542  n. 
Art.  478,  539  n. 
Art.  482,  543  n. 
Art.  486,  544  n.l. 
Art.  487,  544  n.2. 
Art.  491,  546  n. 
Art.  492,  552  n. 
Art.  493,  553  n.l. 
Art.  495,  553  n.2. 
Art.  498-499,  554  n. 
Art.  500,  547  n. 
Art.  501,  548  n. 
Art.  502,  550  n. 
Art.  503,  551  n.l,  555  n.2. 
Art.  507,  549  n. 
Art.  510,  557  n.2. 
Art.  512,  558  n. 
Art.  513,  561  n.,  562  n.l. 
Art.  516,  564  n. 
Art.  517,  563  n. 
Art.  519-520,  562  n.2. 
Art.  521,  562  n.3. 
Art.  526-527,  566  n.2. 
Art.  528,  568  n.2. 
Art.  530,  570  n. 
Art.  531,  567  n. 
Art.  532,  569  n. 
Art.  534,  573  n. 
Art.  535,  565  n.,  568  n.2. 
Art.  538,  568  n.2. 


GERMAN  COMMERCIAL 
CODE — continued. 
Art.  545,  574  n.l. 
Art.  548,  574  n.l. 
Art.  552,  574  n.2. 
Art.  557,  590  n. 
Art.  559,  591  n. 
Art.  563-564,  593  n. 
Art.  567,  594  n.l,  2. 
Art.  573,  594  n.3. 
Art.  577,  595  n. 
Art.  578,  596  n.2. 
Art.  579,  597  n. 
Art.  580,  598  n.l. 
Art.  581,  598  n.3. 
Art.  582,  600  n. 
Art.  583,  598  n.2. 
Art.  587,  601  n. 
Art.  588,  602  n. 
Art.  591,  604  n. 
Art.  594,  605  n.l. 
Art.  597,  605  n.2. 
Art.  601,  607  n. 
Art.  605,  612  n. 
Art.  614,  606  n. 
Art.  618,  617  n. 
Art.  620,  608  n. 
Art.  622,  609  n.l. 
Art.  623,  610  n. 
Art.  625,  611  n. 
Art.  628,  613  n.l. 
Art.  629,  614  n.l. 
Art.  630,  613  n.2. 
Art.  634,  614  n.2. 
Art.  635,  652  n. 
Art.  636,  615  n.,  616  n.2. 
Art.  641,  616  n.l. 
Art.  642,  620  n.,  621  n.,623n. 
Art.  643,  622  n. 
Art.  645,  624  n. 
Art.  646,  626  n. 
Art.  649,  628  n. 
Art.  659,  625  n. 
Art.  664,  630  n. 
Art.  666,  633  n. 
Art.  667,  634  n. 
Art.  668,  670,  637  n. 
Art.  671,  636  n. 
Art.  672,  632  n. 
Art.  675,  638  n. 
Art.  676,  640  n. 
Art.  700,  641  n.2. 
Art.  702,  641  n.3. 
Art.  708,  646  n. 
Art.  711-712,  647  n. 
Art.  716,  642  n.2. 
Art.  717-719,  643  n.2. 


INDEX.  305 

GERMAN     COMMERCIAL  GERMAN    COMMERCIAL 

CODE — continued.  CODE — continued. 

Art.  720,  649  n.  Art.  877,  670  n. 

Art.  721,  642  n.2.  Art.  894,  408  n.,  409  n. 

Art.  723,  645  n.,  646  n.  Art.  895,  399  n. 

Art.  726,  644  n.  Art.  897,  407  n.2. 

Art.  735,  650  n.  Art.  898,  405  n. 

Art.  754-755,  680  n.  Art.  899,  404  n. 

Art.  756,  681  n.  Art.  901,  685  n. 

Art.  764-765,  684  n.  Art.  904,  651  n. 

Art.  767,  682  n.4.  Art.  905,  417  n. 

Art.  768,  682  n.l.  Book  IV,  Sec.  10,  384  n. 

Art.  769,  682  n.3.  Penal    provisions,    Chap.    VI, 

Art.  776,  683  n.  Sec.  3,  Arts.  312-319,  261  n. 

Art.  778,  385  n.  Incompetency      of      member, 

Art.  781,  401  n.  117  n. 

Art.  782,  402  n.2,  3.  Interest,  276  n. 

Art.  784,  403  n.  Rules  for  operation  of  Code, 

Art.  785,  397  n.  1  n. 

Art.  786,  386  n.  Societe  en  nom  collectif,  in- 
Art.  787,  387  n.  dividual  liabilitv,  63  n. 
Art.  788,  388  n.  Stillegesellschaft  (societe 
Art.  789,  389  n.  tacite),  297  n. 
Art.  791,  390  n.  Warehousing,  358  n. 
Art.  792,  391  n.  GERMAN     COMMERCIAL 
Art.  793,  394  n.  CODE  (OLD), 
Art.  795,  656  n.  General     references,     59     n., 
Art.  799,  657  n.  151  n.l. 
Art.  802,  658  n.  Art.  1,  1  n. 
Art.  804,  416  n.  Art.  4,  4  n.4. 
Art.  806-808,  398  n.  Art.  169,  116  n. 
Art.  812,  401  n.,  406  n.  Art.  271,  263  n.5,  264  n.9. 
Art.  813,  662  n.  Art.  272,  264  n.4-6,  8,  11. 
Art.  814,  663  n.  Art.  275,  263  n.2. 
Art.  815,  664  n.  Art.  291,  291  n. 
Art.  816,  665  n.  Art.  305,  281  n.3. 
Art.  817,  666  n.  Art.  324,  278  n. 
Art.  818,  412  n.  GERMAN    COMMERCIAL 
Art.  820,  395  n.,  654  n.  PAPER  ACT,  281  n. 
Art.  821,  396  n.,  667  n.  GERMAN  LAW, 
Art.  823,  659  n.  Interest      to      shareholders, 
Art.  824,  660  n.2.  196  n. 
Art.  834,  393  n.2,  414  n.,  655      GERMAN  LAW  OF  1870, 

n.l.  Shares    acquired    by    associa- 

Art.  840,  414  n.  tion,   151  n.l. 

Art.  842,  544  n.l.  GOOD  FAITH, 

Art.  844,  413  n.  Acting  in,  7. 

Art.  845-847,  668  n.3.  GOOD  WILL, 

Art.  848-849,  395  n.  Contribution    to    association, 

Art.  861,  671  n.  71. 

Art.  862-863,  672  n.  GOVERNMENT, 

Art.  864,  674  n.  Administrative    divisions,    22 

Art.  866,  675  n.2.  n.2. 

Art.  868,  677  n.l.  GUARDIANS, 

Art.  869,  677  n.2,  678  n.  Not  traders,  4  n.2. 

Art.  873,  671  n.2.  Registration,  7. 

Art.  875,  669  n.  Restriction  of  authority,  7. 


306 


INDEX. 


HEIRS, 

Who  are,  under  Japanese  law, 
428   n.l. 
HISTORICAL  INTRODUC- 
TION, page  ix. 
HOLDING  OUT, 
Partnership  by,  65. 
Soci&e*  en  commandite,   116. 
HOTELS, 

Goods    deposited    by    guests, 
354-356. 
HUNGARIAN      COMMERCIAL 
CODE, 
General     references,     63     n., 
151  n.l,  196  n.,  210  n.,  255 
n.l. 
Art.  1,  1  n. 
Art.  89,  64  n. 
Art.  259,  264  n. 10. 
Art.  262,  263  n.2. 
Warehousing,  358  n. 
HUSBAND    AND    WIFE, 

Permission  to  wife  to  become 
member  of  association,  6. 

IMPERIAL  DECREE, 

32d  year  of  Meiji,  No.  271,  8  n. 
INCREASE  OF  CAPITAL, 

Soci&e"  anonyme,  210-219. 
INDORSEMENT, 

Bills  of  exchange,  455-464. 

Warehousing,  recepisse  or  war- 
rant,  364-365,   367,   373. 
INFANTS, 

Competency,  6. 

Prohibited     from     continuing 
in  business,  15. 

Registration,  5. 
INHERITANCE, 

Japanese  law  as  to,  428  n.l. 
INJUNCTIONS, 

Trade     names,     unfair     com- 
petition, 20. 
INSPECTORS,  see  Societe  Ano- 
nyme. 
INSURANCE, 

Abandonment,    marine   insur- 
ance, 671-679. 

Additional  insurance,  388-390. 

Agency  for  owner,  401-402. 

Amount  of  loss,  393. 

Assignment  of  subject-matter, 
404. 

Bailees,  insurance  by,  421. 

Bankruptcy  of  insurer,   405. 

Bankruptcy  of  preneur,   406. 

Beneficiary,  life  insurance,  428. 


INSURANCE— continued. 

Cancellation  before  risk  begins, 
407. 

Cancellation,  increase  or 
change  of  risk,    410-411. 

Carriage  insurance,  423-426. 

Change  of  risk,  410-411. 

Co-insurance,  387. 

Concealment  by  insured,  397- 
398,  429. 

Contract,  formation,  384. 

Contract,  formation,  life  in- 
surance, 427. 

Contract  on  behalf  of  another, 
401-402. 

Defects  in  subject-matter,  loss 
by,  396,  667. 

Departure,  marine  insurance, 
662. 

Excessive  insurance,  386-387. 

Execution  of  insured  for  crime, 
431. 

Expenses  of  effort  to  prevent 
loss,  414. 

Fire  insurance,   419-422. 

Formation  of  contract,  384, 
427. 

Fraud  by  insured,  397-398, 
429. 

General  average,  655. 

General  provisions,  384-418. 

General  provisions,  applica- 
bility to  life  insurance,  433. 

Increase  of  risk,  404,  410-411. 

Insurable    interest,    385,    402. 

Insurable  interest,  life  insur- 
ance, 428. 

Insurable  interest,  marine  in- 
surance, 656-658. 

Insurrection,  loss  caused  by, 
395. 

Knowledge  of  loss  by  insured, 
397. 

Life  insurance,  427-433. 

Limitation  of  actions,  417. 

Loss,  amount  of,  393. 

Loss  bv  malice  or  negligence, 
396,  667. 

Loss  by  nature  of  subject- 
matter  or  wear  and  tear, 
396,   667. 

Loss  by  war  or  insurrection, 
395. 

Loss  followed  by  destruction 
of  property,  413. 

Malicious  intention,  loss  by, 
396,  667. 


INDEX. 


307 


I N  SURANCE— continued. 
Marine  insurance,  653-679. 
Misrepresentation  bv  insured, 

398,  429. 
Murder  of  insured,  431. 
Mutual,    application    of    Code 

to,  418. 
Mutual     association,     not     a 

trader,  4  n.3. 
Names  of  associations,  18  n. 
Negligence,  loss  by,  396,  667. 
Notice  of  death,  432. 
Notice  of  loss,  412. 
Over-insurance,  386-387. 
Partial  insurance,  391. 
Payment    of    loss,    rights    in 

subject-matter,   415. 
Payment  of  loss,  subrogation, 

416. 
Pilotage,   667. 
Policies,     carriage     insurance, 

425. 
Policies,  contents,  403. 
Policies,    fire    insurance,    422. 
Policies,    life    insurance,    430. 
Policies,    marine       insurance, 

661. 
Premiums,    deduction    in    re- 
funding,  409. 
Premiums,  reduction,  392,  400. 
Premiums,  refunding,  408-409. 
Premiums,   return,   399. 
Preneur,     meaning    of    term, 

392  n. 
Prescription,  417. 
Prevention  of  loss,  expenses, 

414. 
Proportional     liability,      387, 

391. 
Quarantine  fees,  667. 
Reduction    of    insurance    and 

premium,   392. 
Reformation    of    contract    by 

preneur,   407. 
Re-insurance,  marine,  674. 
Rights  of   insurer  in  subject- 
matter,   415. 
Risk,  marine,  659-660. 
Risk    not     arising,     premium 

refunded,   408-409. 
Subrogation,   416. 
Successive  insurance,  388-390. 
Suicide  of  insured,   431. 
Surrender  of  property,  415. 
Termination    of    contract    by 

preneur,  407. 
Undisclosed   principal,   402. 


INSURANCE— continued. 

Value  of  propertv,  how  fixed, 
393. 

Value  of  subject-matter  di- 
minished, 392. 

Valued  policy,  394. 

Void  contracts,  concealment 
or  misrepresentation,  398. 

Void  contracts,  knowledge  as 
to  loss,  397. 

Void  contracts,  life  insurance, 
misrepresentation  or  con- 
cealment, 429. 

Void  contracts,  no  insurable 
interest,  402. 

Void  contracts,  return  of 
premium,  399. 

Waiver  as  against  one  insurer, 
390. 

War,  loss  caused  by,  395. 

Wear  and  tear,  loss  by,  396, 
667. 
INTEREST, 

Balance  of  accounts,  295. 

Legal  rate,  276. 

Loans  between  traders,  275. 

Payments  by  traders,  275. 
INTERNATIONAL     COMMER- 
CIAL LAW  CONFERENCE, 

592  n.,   650  n. 
INVENTORY, 

Entry  in  trade  books,  26-27. 

Societe  anonyme,    190. 

Soci6te  anonyme,  liquidation, 
227. 

Societe"  en  nom  collectif,  con- 
solidation or  absorption,  78. 

Societe  en  nom  collectif,  dis- 
solution, 85. 

Societe  en  nom  collectif,  liqui- 
dation, 94. 
INVOICES, 

Carriers,  332. 
ITALIAN  COMMERCIALCODE, 

General  references,  63  n., 
67  n.,  68n.2,  77  n.,  145n.l% 
151  n.l,  164  n.l,  176  n., 
196  n.,  199  n.,  208  n.,  255 
n.l. 

Art.  1,  1  n. 

Art.  3,  263  n.5,  264  n.2-12. 

Art.  7,  2  n. 

Art.  78,  64  n. 

Interest,  276  n. 

Warehousing,  358  n. 


308 


INDEX. 


JAPANESE  CIVIL  CODE, 

General    references,     274    n., 

275  n.,  276  n.,  288  n.l. 
Art.  44.  54,  62. 
Art.  79-80,  234. 
Art.  100,  266  n.,  436  n. 
Art.  108,  317  n.l. 
Art.  Ill,  268  n. 
Art.  167,  285  n. 
Art.  295,  41  n. 
Art.  349,  277  n. 
Art.  412,  279  n. 
Art.  427,  273  n.l,  2,  4. 
Art.  452-453,  273  n.4. 
Art.  467,  469,  55  n. 
Art.  471,  280. 
Art.  473,  55  n. 
Art.  484,  278  n. 
Art.  495-496,  286  n.l. 
Art.  523-524,  270  and  notes. 
Art.  643,  36  n.3. 
Art.  645-646,  37  n. 
Art.  651,  40n.2. 
Art.  653,  188  n. 
Art.  656,  36  n.3,  188  n. 
Application     to     causa     mer- 

cantilis,  1. 
Application  to  employer  and 

employee,  35. 
Appurtenances,  539  n. 
Mortgages  and  pledges,  686  n., 

688  n. 
Partnership,  297  n. 
Partnership,    soci^te"    en   nom 

collectif,  54. 
Sureties,  63  n. 
JAPANESE  CODE  FORCARRY- 
ING    OUT   THE    COMMER- 
CIAL CODE,  331  n.,  494  n. 
JAPANESE    CODE    OF    CIVIL 

PROCEDURE, 
Art.  494-496,  444  n. 
Art.  739-754,  543  n. 
Art.  780-783,  281  n.2. 
JAPANESE  CODE  OF  CRIMI- 
NAL PROCEDURE,  442  n.2. 
JAPANESE  DEPOSIT  ACT,  286 

n.l. 

JAPANESE  LAW  OF  SHIPS, 
General  references,  555  n.l,  3. 
Art.  4,  566  n.l. 
Art.  5,  566  n.l. 
Art.  6,  10-19,  24,  540  n.l. 


JAPANESE     LAW 
CREW,  576  n. 


OF     THE 


JAPANESE     LAW     OF     THE 

REGISTRATION  OF  SHIPS, 

540  n.l. 
JAPANESE  PAWNSHOP  ACT, 

277  n. 
JAPANESE    PROCEDURE    IN 
NON-ACTIONABLE  MAT- 
TERS, 

Art.  39,  9  n.2. 

Art.  48,  57,  14  n. 

Art.  140,  5  n.,  7  n.l. 

Art.  144-146,  11  n. 

Art.  149,  5  n.,  7  n.l,  9  n.2. 

Art.  158,  19  n. 

Art.  161,  21  n. 

Art.  187,  126  n.l. 

Art.  202,  255  n.2. 
JAPANESE        REGULATIONS 

FOR  THE  CARRYING  OUT 

OF  THE  LAW  OF   SHIPS, 

540  n.l,  2. 
JAPANESE        REGULATIONS 

FOR  THE  REGISTRATION 

OF  SHIPS,  540  n.l,  566  n.l. 
JAPANESE  REGULATIONS  OF 

THE    TRADE    REGISTER, 

9  n.2. 
JAPANESE        RULES        FOR 

OPERATION  OF  THE  COM- 
MERCIAL CODE,  8  n.,  19  n. 
JAPANESE  STATUTE, 

Bonds,  199  n. 
JAPANESE       STATUTE       OF 

SHERIFFS,  442  n.2. 
JAPANESE       STATUTE       ON 

THE    ORGANIZATION    OF 

COURTS,  442  n.2. 
JAPANESE      TRADE      MARK 

ACT,  22  n.l. 
JOINT    AND    SEVERAL   CON- 
TRACTS, 273. 
JOINT  OWNERSHIP, 

Ships,  546-552. 
JURISTIC  ACT, 

Definition,  34  n.2. 
JURISTIC  PERSON, 

Business  association  is,  44. 

Definition,  2  n. 

Kinds,  under  Civil  Code,  42  n. 

LIENS, 

Carriers,  349. 
Carriers  by  ship,  610. 
Commercial  agents,  41. 
Commission  merchants,  319. 


INDEX 


309 


LIENS — continued. 

Creditor  s  right  to  retain  prop- 
erty, 284. 

Forwarding  agents,  324. 

Maritime,  557,  680-689. 

Warehousemen,  370,  377. 
LIFE  INSURANCE,  427-433. 
LIMITATION   OF  ACTIONS, 

Bailments,  356. 

Captain's  action  against  ship- 
owner, 575. 

Carriage  of  goods,  ships,  618— 
619. 

Carriage  of  passengers,  ships, 
639. 

Carriers,  349. 

Collisions  of  ships,  651. 

Debts,  285. 

Forwarding  agents,  328-329. 

General  average,  651. 

Insurance,  417. 

Mariners,  589. 

Negotiable  paper,  443. 

Societe  en  nom  collectif,  lia- 
bility after  dissolution,  103. 

Warehousemen,  383. 

Warehousing,  warrants,  374. 
LIMITED  PARTNERSHIP,  see 

Societe     en     commandite; 

Societe    en    commandite    par 

actions. 
LIQUIDATION, 

Societe  anonyme,  226-234. 

Societe   en    commandite     par 
actions,  248-251. 

Societe  en  nom  collectif,  84- 
103. 
LOST  INSTRUMENTS, 

Certificate  of  protest,  517. 

Negotiable  paper,  281. 

Warehousing,      recepisse      or 
warrant,  366. 

MANAGERS, 

In  general,  29-32. 

Not  traders,  4  n.2. 

Societe  en  commandite,    110. 

Societe'  en  nom  collectif,  57. 
MARINE  COMMERCE, 

Accounts  by  captain,  573. 

Accounts  by  snip's  husband, 
554. 

Aliens,  ownership  of  ships,  555. 

Appurtenances  of  ships,   539. 

Assistance  to  ships,  568,  599, 
606. 

Attachment  of  ships,  543. 


MARINE    COMMERCE  —  con- 
tinued. 
Authority  of  captain,  566-572. 
Authority  of  ship's  husband, 

553. 
Baggage    of   passengers,    632, 

638-639. 
Bills  of  lading,  620-629. 
Boats,  538. 
Book   to    be    kept    by   ship's 

husband,  554. 
Borrowing  of  money  by  cap- 
tain, 568. 
Bottomry,  568. 
Captain,  account  by,  573. 
Captain,    advances    or    debts, 

569. 
Captain,        appointment       of 

another  to  act  for,  560. 
Captam,    authority,    566-572. 
Captain,  cargo,  duties  as  to, 

565. 
Captain,   dismissal,   574. 
Captain,     documents     to     be 

kept  in  ship,  562. 
Captain,    inspection    of    ship, 

561. 
Captain,  leaving  ship,  563. 
Captain,  liability,  558-559. 
Captain,  prescription,  575. 
Captain,  report  to  owner,  573. 
Captain,  sailing  and  route,  564. 
Captain,  sale  of  ship,  570-571. 
Captain,  use  of  cargo,  572. 
Cargo,  captain's  duties  as  to, 

565. 
Cargo,  selling  or  pledging,  568. 
Cargo,  use  by  captain,  572. 
Carriage     of     goods,     auction 

sale  of  cargo,  610. 
Carriage     of     goods,   bills     of 

lading,  620-629. 
Carriage    of    goods,    delay    in 

loading,  594-598. 
Carriage  of  goods,  deposit,  607. 
Carriage     of     goods,     disem- 

barkment,  605. 
Carriage    of    goods,    embark- 

ment,  594-598. 
Carriage     of     goods,     freight, 

amount,  608-609. 
Carriage     of     goods,     freight, 

liability   of   consignee,    606. 
Carriage     of     goods,     freight, 

proportional,  613-614. 


310 


INDEX. 


MARINE   COMMERCE  —  con- 
tinued. 

Carriage  of  goods,  freight, 
termination  of  contract,  598, 
600-603. 

Carriage  of  goods,  freight, 
whole,   615-617. 

Carriage  of  goods,  general 
provisions,  590-619. 

Carriage  of  goods,  illegal  voy- 
age, 614. 

Carriage  of  goods,  jettison, 
593. 

Carriage  of  goods,  lien,  610. 

Carriage  of  goods,  limitation 
of  actions,  618-619. 

Carriage  of  goods,  loading, 
594-598. 

Carriage  of  goods,  negligence, 
592,  641. 

Carriage  of  goods,  prescription, 
618-619. 

Carriage  of  goods,  provisions 
as  to  carriers  in  general 
applicable,  619. 

Carriage  of  goods,  return  voy- 
age, 598. 

Carriage  of  goods,  seaworthi- 
ness, 591-592. 

Carriage  of  goods,  sub-con- 
tracts, 612. 

Carriage  of  goods,  termination 
of  contract,  598-601,  603, 
613-614. 

Carriage  of  goods,  unlawful 
embarkation  of  goods,  593. 

Carriage  of  passengers,  630- 
640. 

Carriage  of  passengers,  limita- 
tion of  actions,  639. 

Certificate  of  nationality  of 
ship,  540. 

Charter-parties,  590-619. 

Charter-parties,  passengers, 
640. 

Collisions,  650-652. 

Co-owners  of  ships,  546-552. 

Creditors  of  ships,  680-689. 

Damages,  liability  of  captain, 
558-559. 

Damages,  limitation  of,  544- 
545. 

Demurrage,  594,  605. 

Freight,  amount,  608-609. 

Freight,  liability  of  consignee, 
606. 


MARINE    COMMERCE  —  con- 
tinued. 

Freight, proportional,  613-614, 

Freight,  whole,  615-617. 

General    average,     599,     606, 
641-652. 

General     average     insurance, 
655. 

Hiring  of   ships,   registration, 
556. 

Hiring    of     ships,     rights    of 
hirer,  557. 

Injury  to  cargo,  592,  641. 

Inspection  of  ship,  561. 

Insurance,  653-679. 

Jettison,  593. 

Joint  owners  of  ships,  546-552. 

Journal  of  ship,  562. 

Liability  of  captain,  558-559. 

Liability  of   ship-owner  as  to 
goods,  592,   641. 

Liability   of     ship-owner     for 
captain's  acts,  544-545. 

Liens  on   cargo,   610. 

Liens  on  ships,  557,  680-689. 

Limitation  of  actions,  captain 
against  owner,  575. 

Limitation  of  actions,  carriage 
of  goods,    618-619. 

Limitation  of  actions,  carriage 
of  passengers,  639. 

Limitation    of    actions,    colli- 
sions, 651. 

Limitation  of  actions,  general 
average,  651. 

Limitation    of   actions,    mari- 
ners, 589. 

Limitation  of  ship-owner's  lia- 
bility, 544-545. 

Log-book,  562. 

Mariners,  death,  580. 

Mariners,  definition,  559  n. 

Mariners,  dismissal,  581-583. 

Mariners,  embarking,  576. 

Mariners,  food,  577. 

Mariners,  free    passage,    581- 
583,  587-588. 

Mariners,  hiring,  576  n. 

Mariners,  injury  or  illness,  578. 

Mariners,  leaving  ship,  576. 

Mariners,  prescription,   589. 

Mariners,  term  of  hiring,  585- 
587. 

Mariners,  wages,  544,  578-582. 

Master  of   ship,   see   Captain, 
supra. 


INDEX. 


311 


MARINE    COMMERCE  —  con- 
tinued. 
Mortgages  of  ships,  568,  686- 

687. 
Nationality  of  ships,  540,  555. 
Negligence,  captain,  55S-559. 
Papers  to  be  kept  in  ship,  562. 
Partnership    of     ship-owners, 

551 
Passengers,  630-640. 
Pledging  cargo,  568. 
Pledging  ships,  688. 
Port  of  registry,  566  n.l. 
Prescription,    captain's    claim 

against   owner,   575. 
Prescription,  carriage  of  goods, 

618-619. 
Prescription,   carriage  of  pas- 
sengers, 639. 
Prescription,  collisions,  651. 
Prescription,  general  average, 

651. 
Prescription,  mariners,  589. 
Profits    and    losses    of    ships, 

542,  550. 
Purchase  of  interests  in  ships 

by  co-owners,  555. 
Registration,    hiring    of    ship, 

556. 
Registration,  port  of  registry, 

566  n.l. 
Registration,  ship's    husband, 

552. 
Registration,  ships,  540-541. 
Repair    of     ship,     when     im- 
possible,  571. 
Sailors,  576-589. 
Sale  of  ship  by  captain,  569- 

570. 
Sauvetage,  568,  599,  606. 
Seaworthiness,    warranty    of, 

591-592. 
Ship's  husband,  551-554. 
Ship's  papers,  562,  604. 
Ships,  definition,  538. 
Transfers  of  interests  in  ships, 

551,  555. 
Transfers    of    ships,    541-542, 

684. 
Transfers  of   ships,   mariners' 

rights   and    duties,    584. 
Wages  of  mariners,   544,  578- 

MARINE     INSURANCE,     653- 

679. 
MARITIME  LIENS,  680-689. 


MARRIED  WOMEN, 

Competency,  6. 

Registration,  5. 
MORTGAGES, 

Corporate,   199  n. 

Ships,  568,  686-687. 
MUNICIPALITIES, 

Commercial  transactions  of,  2. 
MUTUAL  INSURANCE,  see  In- 


NAMES, 

Trade,  16-24. 
NAVIGATION,  see  Marine  Com- 
merce. 
NEGLIGENCE, 
Bailees,  353-354. 
Captain  of  ship,   558-559. 
Carriers  of  goods,   337. 
Carriers  of  passengers,  350. 
Forwarding  agents,  322. 
Insurance,  loss  by  negligence, 

396,  667. 
Ships,   injury   to    cargo,    592, 

641. 
Warehousemen,  376. 
NEGOTIABLE  PAPER, 

Acceptance    for    honor,    500- 

507. 
Acceptance  of  bills,   465-473. 
Agents,  signing  by,  436. 
Allonge,  497. 
Alterations,  437. 
Bankruptcy,  acceptor  of  bill, 

480. 
Bills  of  exchange,  acceptance, 

465-473. 
Bills  of  exchange,  acceptance 

for  honor,  500. 
Bills  of  exchange,  bearer,  449. 
Bills  of  exchange,    bills  in   a 

set,  518-524. 
Bills    of    exchange,    collateral 

security,  474-481,  500,  506- 

507. 
Bills    of    exchange,    contents, 

445. 
Bills    of    exchange,    drawing, 

445-454. 
Bills    of     exchange,     indorse- 
ment, 455-464. 
Bills    of    exchange,    interven- 
tion, 500-513. 
Bills   of   exchange,    maturity, 

450-451. 
Bills    of    exchange,    payment, 

482-485. 


312 


INDEX. 


NEGOTIABLE      PAPER  —  con- 
tinued. 
Bills    of    exchange,    payment 

for  honor,  508-513. 
Bills    of    exchange,    place    of 

payment,  452-454. 
Bills     of     exchange,     protest, 

504,  512,  514-517. 
Bills    of    exchange,    recourse, 

486-496. 
Bills  of  exchange,   referee  in 

case     of     need,     448,     458, 

480-481,  500-501,  508-509, 

511. 
Bills  of  exchange,  sight,  450- 

451. 
'   Bills    of    exchange,     sureties, 

497-499. 
Bills  of  lading,  333-335,  344, 

620-629. 
Blank  paper,  signing  of,   435 

n.2. 
Bona     fide     holder     without 

consideration,  441. 
Business  hours,  283. 
Certificate  of  protest,  515. 
Checks,  contents,  530. 
Checks,  crossing,  535. 
Checks,  payable  at  sight,  532. 
Checks,    payable    to    drawer, 

531. 
Checks,  penal  provisions,  536. 
Checks,  presentation,  533. 
Checks,  protest,  534. 
Checks,  provisions  as  to  bills  of 

exchange  applicable,  537. 
Checks,  recourse,  534. 
Collateral  security,   500,   506- 

507. 
Collateral     security,     bills    of 

exchange,   474-481. 
Conditional  acceptance  of  bills, 

469. 
Consideration,  boda  fide  holder 

without,  441. 
Copies  of  bills,  518-524. 
Current  accounts,  292. 
Days  of  grace,  439  n. 
Defences  against  holder,  440. 
Definition,  434. 
Deposit  on  non-acceptance  of 

bill,  474-481. 
Deposit  where  no  demand  for 

payment  of  bill,  485. 
Equities,  what  may  be  set  up, 

440. 
Exchange,  rate  of,  491. 


NEGOTIABLE  PAPER— con- 
tinued. 

Forged  paper,  437. 

Holder  in  good  faith  without 
consideration,  441. 

Incompetent  persons,  rescis- 
sion by,  438. 

Indorsement  after  maturity, 
462. 

Indorsement,    bills,    455-464. 

Indorsement,  blank,  464. 

Indorsement  without  recourse, 
459. 

Language  of  paper  binding, 
435. 

Limitation  of  actions,  443-444. 

Lost,  281. 

Lost  certificate  of  protest,  517. 

Matters  not  mentioned  in 
Code  but  included  in  paper, 
439. 

Parts  of  bill,  518-524. 

Payment,  bills  of  exchange, 
482-485. 

Payment  for  honor,  508-513. 

payment,  place  of,  278,  490, 
494. 

Payment,  time  of,  279. 

Pledges,  bills  of  exchange,  463. 

Prescription,  443-444. 

Presentation,  279. 

Presentation,  checks,  533. 

Presentation,  notes,  527-528. 

Presentation  of  bills  for  accept- 
ance, 465-467. 

Presentation  of  bills  for  pay- 
ment, 482. 

Presentation,    place    of,    442. 

Promissory  notes,  contents, 
525. 

Promissory  notes,  place  of 
payment,  526. 

Promissory  notes,  presenta- 
tion, 527-528. 

Promissory  notes,  protest,  527. 

Promissory  notes,  provisions 
as  to  bills  of  exchange 
applicable,  529. 

Procest,  bills  of  exchange, 
462,  467-475,  482,  487,  504, 
512,  514-517. 

Protest,  checks,  534. 

Protest,  notes.  527. 

Protest,  place  of,  442. 

Protest,  waiver,  489. 

Recourse,  bills  of  exchange, 
486-496. 


INDEX. 


313 


NEGOTIABLE      PAPER—  con- 
tinued. 

Recourse,  checks,  534. 

Recourse,  limitations,  443- 
444. 

Referee  in  case  of  need,  448 
458,  480-481,  500-501,  508- 
509,  511. 

Rescission  by  incompetent 
person,  438. 

Set  of  bills,  518-524. 

Subrogation,  payor  for  honor, 
513. 

Subrogation,  surety,  499. 

Sureties,  497-499. 

Transactions  as  to,  263. 

Way-bills,  333. 
NOTARY  PUBLIC, 

Protest,  514-517. 
NOTES  AND  BILLS,  see  Nego- 
tiable paper. 
NOTICE, 

Commercial  agents,  39. 

Insurance,  loss  or  death,  412, 
432.^ 

Societe  en  nom  collectif,  con- 
solidation or  absorption, 
78-79. 

OFFER  AND  ACCEPTANCE, 
269-272. 

ORDONNANCE  DE  LA  MA- 
RINE, 568  n.l. 

PARTNERSHIP,  see  Soci&e"  en 
Commandite;      Societ6    en 
Nom  Collectif. 
Dormant     partners     (societe" 

tacite),  297-304. 
Ship-owners,  551. 
PASSENGERS, 

Carriers  of,  350-352. 
Ships,  630-640. 
PAYMENT, 

Bills  of  exchange,  482-485. 

Place  of,  278. 

Place    of,    bills   of   exchange, 

452-454,  472,  490,  494. 
Retention     of     property     by 
creditor,  284. 
PEDDLERS, 

Provisions  not  applicable  to,  8. 
PENAL  PROVISIONS, 

Business     associations,     26 1- 

262. 
Checks,  536. 


PERFORMANCE, 

Place  of,  278. 

Time  of,  sales,  287. 
PETTY  TRADERS, 

Provisions  not  applicable  to,  8. 
PLEDGES, 

Bills  of  exchange,  463. 

Cargo  of  ship,  568. 

Commercial  transactions,  277 

Ships,  688. 

Warehousing,  protest  and  auc- 
tion sale,  368-373. 

Warehousing,  transfer  of  r£- 
cepisse  or  warrant,  364-365, 
367. 

PORTUGUESE    COMMERCIAL 
CODE, 

General  references,  100  n.2, 
164  n.l,  166  n.,  177  n., 
196  n.,  199  n.,  232  n.l, 
255  n.l. 

Art.  3,  1  n. 

Art.  17,  2  n. 
PREFERRED  SHARES, 

Societe  anonyme,  211-212. 
PRENEUR, 

Meaning  of  term,   392  n. 
PRESCRIPTION, 

Bailments,  356. 

Captain's  action  against  ship- 
owner, 575. 

Carriage  of  goods,  ships,  618- 
619. 

Carriage  of  passengers,  ships, 
639. 

Carriers,  349. 

Collisions  of  ships,  651. 

Debts,  285. 

Forwarding  agents,  328-329. 

General  average,  651. 

Insurance,  417. 

Mariners,  589. 

Negotiable  paper,  443. 

Societe  en  nom  collectif,  lia- 
bility after  dissolution,  103. 

Warehousemen,  383. 

Warehousing,  warrants,  374. 
PRINCIPAL  AND  AGENT,  see 

Agency. 
PROMISSORY  NOTES,  525-529, 

and    see    Negotiable    Paper. 
PROPERTY, 

Commercial  transactions,  263- 
265. 


314 


INDEX. 


PROTEST, 

Bills  of  exchange,  462,  467- 
475,  482,  487,  504,  512, 
514-517. 

Certificate  of,  515. 

Checks,  534. 

Place  of,  442. 

Promissory  notes,  527. 

Waiver,  489. 

Warehousing,   holder  of  war- 
rant, 368,  373. 
PUBLIC  JURISTIC  PERSONS, 

Application  of  Code  to,  2. 

Definition,  2  n. 
PUBLICATION, 

Contradicted  by  registration, 
14. 

Registered  matters,  11-12,  14. 

RAILWAYS, 

Carriage  by,  331  n. 
REAL  PROPERTY, 

Ships  as,  540  n.l,  55G  n. 
RECEPISSE,    see    Warehousing. 
REGISTRATION, 

Abandonment     or     alteration 

of  trade  names,  24. 
Bonds,  societe  anonyme,  204. 
Branch  establishments,  10,  13. 
Business  associations,  45-46. 
Changes  to  be  registered,   15. 
Consolidation  or  absorption  of 

societe  en  nom  collectif,  81. 
Dissolution  of  societe  en  nom 

collectif,  76. 
Foreign  business  associations, 

255-257. 
Guardians,  7. 

Increase  of  capital,  217-218. 
Infants,  5. 

Kinds  of  registers,   9  n.l. 
Liquidation,  90,  97,  99. 
Managers,  31. 
Married  women,  5. 
Mistakes  in,  14  n. 
Negligence  of  officer,  14. 
Petty  traders,  8. 
Publication,  11-12,  14. 
Ship's  husband,  552. 
Ships,  540-541. 
Ships,  hiring,  556. 
Ships,  port  of  registry,  566  n.l. 
Societe   anonyrne,    formation, 

141. 
Soci6t6  en   commandite,    107. 


REGISTRATION— continued. 
Societe         en         commandite, 
change  into  societe  en  nom 
collectif,  118. 
Societe    en    commandite    par 

actions,  242. 
Societe    en    commandite    par 
actions,  change  into  societe 
anonyme,   254. 
Societe1  en  nom  collectif,  51- 

53. 
Trade  names,  19-24. 
Trade  register,  9-15. 
Transfers  of  trade  names,  21. 
Unregistered    matters   no    de- 
fence,  12. 
RELATIVE    COMMERCIAL 

TRANSACTIONS,  4n.  1,  264. 
RELATIVES, 

Who  are,  under  Japanese  law, 
428  n.2. 
RESCISSION, 

Negotiable  paper,  438. 
Sales,  288-290. 

Societe  en  nom  collectif,  100. 
Subscriptions  to  society  ano- 
nyme,   140,   142. 
RESTRAINT  OF  TRADE, 
Transfer  of  business,  22. 

SAILORS,  576-589. 
SALES,  see  Auction  Sales, 

In  general,  286-290. 

Auction  sale  by  vendee,  289- 
290. 

Auction   sale   on   vendee's  re- 
fusal to  accept,  286. 

Delivery,  place  of,  278. 

Deposit   by   vendee,   289-290. 

Deposit    on    vendee's    refusal 
to  accept,  286. 

Inspection  by  vendee,  288. 

Notice  of  defect  or  deficiency 
in  quantity,  288. 

Notice   to    commercial   agent, 
39. 

Refusal    to    accept    delivery, 
286. 

Rescission  by  vendee,  288-290. 

Safe-keeping  of  goods,  272. 

Time  of  performance,  287. 

Warranty,    notice    by    vendee 
of  breach,  288. 

When      commercial     transac- 
tions, 263-265. 
SAUVETAGE,  599,  606. 


INDEX. 


315 


SECURITIES, 

Definition,  263  n.3. 
SET-OFF, 

Current  accounts,  291-296. 
SHERIFFS, 

Japanese  law  as  to,  442  n.2. 

Protest,  514-517. 
SHICHOSON, 

Definition,   19  n. 
SHIPS,  see  Marine  Commerce. 

socif/tf:  ANONYME, 

Abandonment  of  formation, 
138 

Accounts,  190-198. 

Actions  by  and  against  direc- 
tors,   185. 

Alteration  of  articles  of  asso- 
ciation,  138,  208-220. 

Annulment  of  resolutions,  163. 

Articles  of  association,  120- 
122. 

Articles  of  association,  altera- 
tion, 138,  208-220. 

Auditors,  180-189. 

Auditors,  appointment,  123, 
133. 

Auditors,  increase  of  capital, 
214. 

Auditors,  report  to  preliminary 
meeting,    134. 

Bankruptcy,  174. 

Bankruptcy  or  incompetency 
of  auditor  or  director,   188. 

Beginning  business,  46  n.,  139. 

Bonds,  199-207. 

Book  of  bonds,  173. 

Book  of  shareholders,  172. 

Books  to  be  kept,  171. 

Books  to  be  preserved  after 
liquidation,  233. 

Capital,  loss  of,  174. 

Certificates  of  stock,  148. 

Commercial  transactions  by 
directors,  175-176. 

Compensation  of  directors, 
179. 

Consolidation  or  absorption, 
222-223. 

Contributions  in  property,  135. 

Decrease  of  capital,  220. 

Deposits  bv  directors,  168. 

Directors,  164-179. 

Directors,  accounts,  190-192. 

Directors,  appointment,  123, 
133. 

Directors,  auditors  as,   184. 


SOClfiTg     ANONYME  —  con- 
tinued. 

Directors,  duty  to  apply   for 
inspectors,  124. 

Directors,     must     be     share- 
holders, 120  n.2. 

Directors,    report    to   prelimi- 
nary meeting,  134. 

Directors,  termination  of  office, 
188  n. 

Dismissal  of  directors,  167. 

Dissolution,    221-225. 

Distribution    of   profits,    194- 
197. 

Dividends,  194-197. 

Formation,  119-142. 

General  meetings,  156-163. 

Increase   of   capital,   210-219. 

Inspection      of      books      and 
papers,   171,   191. 

Inspectors,  158,  182,  198. 

Inspectors,  appointment,  124. 

Inspectors,  increase  of  capital, 
214. 

Inspectors,  special,  134. 

Interest  to  shareholders,  196- 
197. 

Inventory  and  balance  sheet, 
190,  227. 

Liability  of  auditors,  186-187. 

Liability  of  directors,  177-178. 

Liability  of  shareholders,  144. 

Liquidation,   226-234. 

Management        of       business, 
managers,  169. 

Managers,  auditors  not  to  be, 
184. 

Meetings    called    by   auditors, 
182. 

Meetings  of  shareholders,  156- 
163. 

Meetings,  preliminary,  131. 

Mortgages,  199  n. 

Notice  of  general  meeting,  156. 

Organization,  156-189. 

Preferred  shares,  197,  211-212. 

Preliminary  meeting,  131,  135, 
138 

Profits,  194-197. 

Promoters,    liability  for  dam- 
ages,  137. 

Promoters,  liability  for  unpaid 
subscriptions,  136. 

Promoters,     report     to     pre- 
liminary   meeting,    132. 

Promoters,  seven  required,  1 19. 

Proxies,  161. 


316 


INDEX. 


SOCIETE"      ANONYME  —  con- 
tinued. 

Registration,  bonds,  204. 
Registration,  formation,  141. 
Registration,  increase  of  capi- 
tal, 217-218. 
Set-off    against    subscriptions, 

144. 
Shareholders,  interest  to,  196- 

197. 
Shareholders,  liability,  144. 
Shares,  amounts,  145. 
Shares,  calls,  152-153. 
Shares,  cancellation,  151. 
Shares,  capital  to  be  divided 

into,   143. 
Shares,  certificates,  148. 
Shares,  certificates  to  bearer, 

155. 
Shares,  forfeiture,  152-153. 
Shares,  joint  ownership  of  one 

share,  146. 
Shares,  not  to  be  acquired  by 

society,  151. 
Shares,  personal  and  to  bearer, 

150  n. 
Shares,  price  of  issuance,  128- 

129. 
Shares,     registration,     before 

issuance,  147. 
Shares,     transfers,      149-150, 

154. 
Sinking  fund,  194-195. 
Societe    en    commandite    par 

actions  changed  to,  252-254. 
Special  meetings,   159-160. 
Stock,    see    Shares,    Subscrip- 
tions. 
Subscriptions,    certificates   of, 

126. 
Subscriptions,  failure  to  pay, 

130. 
Subscriptions,    invitation    of, 

125. 
Subscriptions,  payments,  123, 

127-130. 
Subscriptions,  promises  as  to, 

122. 
Subscriptions,  rescission,   140, 

142. 
Subscriptions,  set-off,  144. 
Terms   of   directors,  166. 
Transfer  of  bonds,  206. 
Transfer    of    stock,     149-150, 

154. 
Votes   of    members,    161-162. 


SOCIETE*   EN  COMMANDITE, 

Agency  of  members,  1 14—1 15. 

Articles  of  association,  106. 

Beginning      business      before 
registration,  46  n. 

Change   into   societe  en   nom 
collectif,  118. 

Contributions     of     members, 
108. 

Death  of  member,  117. 

Definition,  104. 

Dissolution,  118. 

Holding  out,  116. 

Inspection     of    accounts     by 
members,  111. 

Management  of  business,  109- 
111,  113-115. 

Managers,  110. 

Members,  authority,  109-111, 
113-115. 

Members,  carrying  on  business 
for  themselves,  113. 

Registration,  change  into  so- 
ciete en  nom  collectif,  118. 

Registration,  liability  of  mem- 
bers,  107. 

Representative  members,  114- 
115. 

Ships,  555. 

Transfer     of     members'     in- 
terests,  112. 
SOCIETE"     EN    COMMANDITE 
PAR  ACTIONS, 

Accounts,  251. 

Articles  of  association,  237. 

Auditors,  239,  241,  245. 

Beginning      business      before 
registration,  46  n. 

Change  into  society  anonyme, 
252-254. 

Continuation,  247. 

Dissolution,  246-248. 

In  general,  235-254. 

Liquidation,  248-251. 

Management  of  business,  244. 

Membership,  235-236. 

Promoters,  237. 

Registration,  242. 

Registration,  change  into  so- 
ciete anonyme,  254. 

Ships,  555. 

Subscriptions,  238. 

Votes  of  members,  240. 


INDEX. 


317 


soci£t£    en    nom   col- 

LECTIF, 

Absorption,  77-82. 

Accessory  debtors,  63  n. 

Agency  of  members,  61-62. 

Alteration  of  articles,  58. 

Articles  of  association,  49-50. 

Assignment  of  debts  to,  55. 

Bankruptcy   of   member,    69. 

Beginning  business  before 
registration,  46  n. 

Books  and  papers,  preserva- 
tion,  101. 

Branch  establishments.  51-53. 

Civil  Code,  application,  54,  62. 

Consolidation,  77-82. 

Continuation  by  consent,  75. 

Contributions,  55,  66,  71. 

Creditors,  objections  to  con- 
solidation, 79. 

Death  of  member,  69,  102. 

Debts,  contributions  by  mem- 
bers on  liquidation,  92. 

Debts,  liability  of  members, 
63-65. 

Debts,  liability  of  retiring 
member,  73. 

Dissolution,  74-83. 

Dissolution,  limitation  of  lia- 
bility of  members,  103. 

Dissolution,  rescission  of 
formation,   100. 

Distribution  of  assets  on  liqui- 
dation, 95. 

Expulsion  of  member,  69-70, 
83. 

External  relations,  61-67. 

Formation,    49-53. 

Good  will,  contribution,  71. 

Holding  out,  65. 

Impairment  of  capital,    67. 

Individual  liability  of  mem- 
bers, 63-65. 

Internal  relations,  54-60. 

Inventory  and  balance  sheet, 
78,  85,  94. 

Joint  liability  for  debts,  63. 

Liquidation,  84-103. 

Liquidators,  87-99. 

Management  of  business,  56- 
58. 

Managers,  57. 

Members,  authority,  61-62. 

Members,  carrying  on  business 
for  themselves,  60. 

Members,  expulsion,  69-70,  83. 


soci£t£    en  nom    col- 

LECTIF — continued. 
Members,    liability   for  debts, 

63-65. 
Members,    liability    for    debts 

incurred    before   admission, 

64. 
Members,  powers  as  to   man- 
agement, 56-58. 
Members,    retirement,    68-73. 
Members,  transfersof  interests, 

59. 
Name  of  retiring  member,  72. 
Notice     of     consolidation     or 

absorption,  78-79. 
Profits,  distribution,  67. 
Property,   disposition  on   dis- 
solution, 85-86. 
Registration,  51-53. 
Registration,  consolidation  or 

absorption,  81. 
Registration,    dissolution,    76. 
Registration,    liquidation,    90, 

97,  99. 
Removal  of  offices,  52. 
Representative  members,  61- 

62. 
Rescission  of  formation,    100. 
Retirement  of  members,   68- 

73. 
Scope,  acts  beyond,  58. 
Ships,  555. 
Societe        en         commandite 

changed  into,   118. 
Transfer  of  members'  interests, 

59 
SOClfiffi  TACITE, 
Bankruptcy,  302. 
Contribution  of  dormant  part- 
ner, 298,  303. 
Death  of  proprietor,  302. 
Dormant  partner,  distribution 

of  profits,  300. 
Dormant   partner,   rights  and 

duties,  298. 
Dormant  partner,  use  of  name, 

299. 
Formation,  297. 
Losses,   300,  303. 
Termination,  301-303. 
SPANISH    COMMERCIAL 

CODE, 
General    references,    151    n.l, 

153  n.l,  210  n. 
Art.  2,  1  n. 
Juristic  persons,  44  n. 
Warehousing,  358  n. 


318 


INDEX. 


STOCK,  see  Societe  Anonyme. 
STOPPAGE  IN  TRANSITU,  342. 
STREET  VENDERS, 

Provisions  not  applicable  to,  8. 
STUDENTS, 

Buying  books,  3  n.,  4  n.l. 
SUBROGATION, 

Bills   of   exchange,   payor   for 
honor,  513. 

Insurance,  416. 

Sureties  on  bills,  499. 
SURETIES, 

Bills  of  exchange,  497-499. 

Joint  and  several  liability  with 
principal,  273. 

Subrogation,  bills  of  exchange, 
499. 
SWEDISH     COMMERCIAL 

CODE,  151  n.l,  208  n. 

swiss  code  f£d£ral  DES 

OBLIGATIONS,  63  n.,  64  n., 
151  n.l,  153  n.l,  164  n.l, 
196  n.,  208  n. 

TRADE  BOOKS,  25-28. 
TRADE  EMPLOYEES,  29-35. 
TRADE  NAMES, 

Abandonment    or    alteration, 

24. 
Association    name    not    to    be 

used    when    no    association 

exists,    18. 
Business    associations,    17-18. 
Damages   for  unfair  competi- 
tion,  20. 
Individuals,  what  names  may 

be  used,   16. 
Injunction   to   restrain  others 

from  using,  20. 
Necessity  for,    16  n.2. 
Registered    names   not   to   be 

used  by  others,   19-20. 
Registration,    19-24. 
Soci6t6  en  nom  collectif,  name 

of  retiring  member,  72. 
Transfer,  21-23. 
Unfair  competition,  20. 
TRADE  REGISTER,  9-15. 
TRADERS, 

Compensation  for  transaction 

on  behalf  of  another,  274. 
Current  accounts,  291-296. 
Definition,  application  of  Code, 

4-8. 
TRUST  COMPANIES,   199  n. 


UNDISCLOSED    PRINCIPAL, 

Brokers,  311. 

In  general,  266. 

Insurance,  402. 

Negotiable  paper,  436. 
UNFAIR  COMPETITION, 

Trade  names,  20. 

Transfer  of  business,   22. 
UNIVERSITY    OF    PENNSYL- 
VANIA     LAW      REVIEW, 

42  n.,  54  n. 

VENDOR   AND   VENDEE,    see 

Sales. 

WAR, 

Insurance,  loss  by  war,  395. 
WAREHOUSING, 

Assignment    of    recepisse    or 

warrant,  364-365,  367. 
Auction    sale    at    instance    of 

holder  of  warrant,  369-373. 
Auction    sale    by   warehouse- 
man, 381. 
Books,  entries  in,  360,  371. 
Care  required,  376. 
Compensation,  377. 
Definition,  357. 
Deposit    of    amount    of    debt 

to  procure  return  of  goods, 

380. 
Disposition  of  goods,  recepisse 

and  warrant,  363. 
Division    of    goods,    separate 

receipts,  361. 
Examination   of   goods,    right 

to   make,  375. 
Indorsement  of  recepisse  and 

warrant,    364-365,    367. 
Injury  to  goods,  376. 
Liability  for  loss  or  injury  of 

goods,   376. 
Liability,   when  extinguished, 

382-383. 
Lien,  370,  377. 
Limitation  of  actions  against 

warehousemen,  383. 
Limitation    of    actions,    war- 
rants,  374. 
Loss  of  goods,  376. 
Lost  recepisse  or  warrant,  366. 
Negligence,  376. 
Pledge  of  recepisse  or  warrant, 

364-365,  367. 
Prescription,   warehouseman's 

liability,  383. 


INDEX. 


319 


WAREHOUSING— continued. 
Prescription,  warrants,  374. 
Protest  by  holder  of  warrant, 

368,  373. 
Recepisse,  contents,  359. 
Recepisse,  effect  of,  362-363. 
Recepisse,  loss  of,  366. 
Recepisse,  surrender  of,  379. 
Recepisse  to  be  furnished,  358. 
Recepisse,   transfer,   364-365, 

367. 
Refusal  of  depositor  to  receive 

goods,  381. 
Return  of  goods,  378-380. 
Termination  of  storage,  378- 

379. 
Transfer     of     r6c£pisse     and 

warrant,  364-365,  367. 


WAREHOUSING— continued. 
Warrant,  contents,  359. 
Warrant,  effect  of,  362-363. 
Warrant,  loss  of,  366. 
Warrant,  prescription,  374. 
Warrant,  protest,  368,  373. 
Warrant,    surrender   of,    379- 

380. 
Warrant  to  be  furnished,  358. 
Warrant,    transfer,     364-365, 

367. 

WARRANT,  see  Warehousing. 
WARRANTY,  see  Sales. 
WAY-BILLS, 

Common  carriers,  333-335. 
YORK-ANTWERP  RULES,  641 

n.l. 


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